Universities and colleges are a large part of the economy of any major city. These learning institutions with many administrative and academic jobs with large endowments bring in plenty of new students to the area and serve as a key component to the real estate sector, including student housing. Every year, undergrad and grad students alike come to Philadelphia to begin their educational journeys to their careers and must search out somewhere to live. This yearly influx of students benefits Philadelphia and the real estate market in areas adjacent to the universities.
Thanks to approachable property prices in Philadelphia when compared to many other major metropolitan areas, there is a trend in the most recent years surrounding parents getting condos in Philly for undergrads. The newest trend is grad students purchasing homes in Philadelphia before they begin their programs at schools such as Drexel University, The University of Pennsylvania, Temple University and others.
Below, we offer an understanding of why grads are choosing to buy a Philadelphia home instead of renting or choosing a different option for student housing.
Parents Purchasing Condos for Students Began to Trend
Parents who are thinking outside of the box found that buying an investment home to accommodate their student while they’re in school was a good option. Not only will the student have the same housing for their entire educational career, but there is also potential for appreciation of the home over the years instead of canceled checks that come with living in a typical dorm room.
The student can enjoy more real work experience in managing their real estate or even being a landlord, which can be a good skill to have. Should a parent purchase a two or three bedroom home, their child can bring in roommates to help with bringing in income. After four years have passed, parents can choose to sell their property or rent it out to students that come in the future.
Grad Students Are Buying Instead of Renting in Philadelphia
Parents buying homes for their undergrads has inspired other grad students to do the same. When it comes to choosing between renting and buying, there are a few benefits toward the latter. MBA or Ph.D. students will be spending money on their accommodations in the city regardless, so it may be smarter to build up equity simultaneously instead of paying a local landlord.
There is also the potential for investment appreciation when one purchases their house or condo instead of renting. Most master’s programs last only two years, so there will be a shorter timeline as opposed to a bachelor’s degree. Still, if the home is well situated or if there is a plan to stay in Philadelphia after graduation, there is a high potential for appreciation of the property that students can take advantage of to offset the price of their degrees.
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Grad students will also qualify for mortgages, but timing is important. Most graduate students who are enrolling don’t have unlimited money to buy a home and pay their tuition at once. Because of this, buying a home in Philly will need mortgage financing. Still, how do you qualify for a mortgage if you are an unemployed full-time student?
Usually, grad students come from a background of a couple of years of work experience and remain employed up until they leave to study. For students interested in buying a home, the best time to purchase a home is while you still have employment, preferably in the late spring or early summer. This way, students have time to qualify for their mortgage before they become a student who lacks income.
A few Philly neighborhoods where grad students commonly purchase homes include:
- Brewerytown
- Fishtown
- Gayborhood
- Graduate Hospital
- Mantua
- Point Breeze
- University City
When buying a residence in any of these neighborhoods while going to school, new homeowners will need to ask themselves what they want to do with the home once they graduate. If a buyer wants to remain in Philadelphia afterward, there are several options available. They can keep living in the home, rent it out to incoming grad students or sell the Philly property and find another.
Depending on the size of the home that is bought, students can rent out other bedrooms to students. Once the homeowner has graduated and starts to work again, they can rent their old room to help to fully transition the home into an investment property. On the other hand, after spending graduate study years in the home, homeowners that have their new degrees are able to sell their homes and use the proceeds to trade up for a better property in a nearby Philadelphia neighborhood.
There are many benefits to buying a home in Philadelphia during your school years opposed to renting a home. This is true both in the short term and the long term.