Housing: A financial look
Most students pay $5500 a year for a room on campus and take nothing away four years later. A few investment-minded Carnegie Mellon students, though, are looking to put their living space to work.
The lure of land ownership has a few students turning the college experience into a quick profit. Private bathroom and utilities included.
Pittsburgh real estate agents are reporting more parents buying houses or condos for their college-age children, according to a September 17 article in the Pittsburgh Tribune-Review.
“It’s more common this year than in the past,” said Cliff Schultz, a manager of the Howard Hanna real estate agency, in the Tribune-Review. “[Parents] see the cost of housing go up at universities, and they say, ‘I can make an investment and turn it around in four years and make a profit.’ ”
The proximity of hospitals and other universities to Carnegie Mellon’s campus may make for a wise investment.
“It’s not inflated as other markets, but the university area is above average for Pittsburgh,” said Jeffrey Myers, an adjunct professor in the Tepper School of Business.
“It’s important to have that infrastructure in place.”
Navigating Pittsburgh’s home-ownership terrain comes with a set of risks, particularly for those in their late teens and early 20s.
“I basically pay the bills, and it takes a lot of time to go through a lot of stuff yourself. You have to go through the companies and set everything up by yourself,” said Angela Huang, a sophomore industrial design major.
Last year, Huang, who now lives in Shadyside, lived in New House. Overall, she is happy with her decision to move because of the space her Shadyside condo affords compared to campus living.
“Especially if you’re paying the bills, you have to think about not using too much water or electricity,” Huang said.
Despite these drawbacks, Ted Knowlton, an agent for Coldwell Banker, described one success story in the same Tribune-Review article.
He sold a one-bedroom house in Oakland six years ago to a family with a daughter attending the University of Pittsburgh. They bought it for $38,500. They sold it last fall for $110,000.
Another concern for students living off campus is transportation.
For example, Huang must find a way to get from Shadyside’s Walnut Street shopping district to campus every day. She does not have a car, so she had to find a place with a University Escort stop nearby. Sometimes, she walks.
“It’s kind of too far from school. I stay less at home because I’m a design major, so I don’t think it’s that convenient,” she said.
The distance has its perks, though.
“You can do whatever to your house or room though. If you live on school property you can’t paint the walls or anything,” she said.
Another student, Trevor Braun, decided he preferred the privacy and freedom that off-campus living afforded.
It appears that he will be rewarded for his decision. He bought his townhouse for about $67,000. Recently, it was appraised at $90,000.
Braun opted to pay a flat rate of $240 per month for maintenance and utilities to a management company, eliminating the hassle of separate bills. His mortgage is an additional $450 a month.
“On average, this investment is gaining about $5000 a year,” said Braun, a sophomore in the Tepper School of Business. “It should grow another $10,000 before I graduate.”
Braun lives in a condominium complex three blocks from campus in Shadyside. After one year in Mudge, which he described as “an okay experience,” Braun decided he wanted more personal space.
“There are liability issues with putting a 17-, 18-, or 19-year-old in his own house. If he’s living in a dorm, he can make mistakes and not cause serious liability,” Myers said. “You just open yourself up to more exposure.”
The Tribune-Review article suggests talking to a mortgage broker about the best neighborhoods for such investments.
Myers recommended a condo over a house, eliminating time-consuming tasks such as fixing leaky roofs and mowing the lawn. He pointed out that housing options near the University aren’t the best, as many landlords have sat on older properties without making renovations.
“You have to be careful when you buy a home on the top of the market and sell it four years later,” Myers said. “I personally don’t like a short window of opportunity. I think short-term real estate investments are difficult simply because of the exit costs.”