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Families Buy Luxury Homes for Their Kids in College Towns.


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So when I think of international students coming to the US for college I'm just not imagining these sorts of numbers.

 

I know that many prosperous families in China move assets out of the country. But this is still hard to wrap my head around.

 

http://m.us.wsj.com/articles/SB10001424052702303779504579467522202091120?ref=/home-page

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Wow! I must admit that buying something near GA Tech might have been a good investment for us, but what if my kids all decided that engineering wasn't for them?

 

I had a friend at GA Tech from Greece. His dad bought him an apartment in the building where Elton John lives. But, my friend was a student at GA Tech when the purchase was made, not still in grade school.

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Dh's friend bought a condo in Boston for his dd to use (with a paying room  mate) after her first year of college in dorms because he figured he could turn around and make money on the investment when she graduated rather than have her spend money on rent for the rest of college. 

 

But that's not the same as the article. To what dh's friend did, one still must have some capital up front to invest. 

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Luxury home, ahhhh, no. Simple, small home that could be rented to other sudents? Yes, something to consider. If both of our ds's landed at MTU, we would definitely consider it. Also, that area would be a lovely vacation spot so we could use the home in the summer for long stretches.

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It is common enough here. There are tours just for China nationals to buy homes for this purpose. Houses here do cost in the millions.
It was in our local papers. Some are for kids going to attend university here. Some are for future use.

ETA

WSJ June 2012 article "Courting the Chinese Buyer"

"Di Meng, a native of Changchun who lives in Beijing, is currently attending the University of Southern California. The 23-year-old says the volatility of the Chinese government and, consequently, its economy, pushed him to invest in real estate overseas. Not keen to rent student housing, he recently paid around $800,000 for a Ritz-Carlton condo in downtown Los Angeles."
E.g.
http://www.mercurynews.com/business/ci_24192747/asian-buyers-scoop-up-bargain-million-dollar-bay
http://m.theatlantic.com/china/archive/2013/11/why-chinese-people-buy-so-many-homes-in-palo-alto/281234/

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I know several people who have bought a town house or condo wherever their kid was going to college.  Not luxury places though.  Just normal town homes or condos.  They felt it was a better use of their money than paying dorm fees or apartment rent.  Then they either sold the property or rented it out once the kid graduated and moved on.  One friend has held on to the condo because she likes the town so much.

 

It's never struck me as being an unusual thing to do, so it doesn't seem surprising that wealthy foreigners do it with an eye on earning a good return on their money until junior needs it.

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Dh's friend bought a condo in Boston for his dd to use (with a paying room mate) after her first year of college in dorms because he figured he could turn around and make money on the investment when she graduated rather than have her spend money on rent for the rest of college.

 

.

I have heard of this and think it sounds like a good investment. We don't have the capital for it and wouldn't want to go into as much debt as it would require, though. I am also not experienced in keeping rental property and fear it would become more burdensome than it was worth.

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I, too, could see buying a reasonable place.  I used to have a friend that continued to live in the townhouse his parents had bought near his college.  He got a job nearby or at the University I forget.  When he graduated, they'd paid off the townhouse with the rent he'd collected.  So, they just gave it to him.  

 

I never particularly liked the idea of sharing walls.  But, he had some great neighbors.  They were very quiet and they over heated their space, and over air-conditioned in the summer.  So, his electric bills were almost nothing because of the air leakage through the walls.  

 

I remember being very annoyed about a particular person at my University though.  He was Prince of a small country in Africa.  He drove a newish Mercedes.  His parents had bought a fancy house for him.  Which is all fine and good.  But, he was on a full need based ride at college because his father's documented income was $100/year.  

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We sold our first house to a lesbian couple who had brought same age children into their relationship so they had two boys who were going to college at the same nearby college.  There were three bedrooms in the house so they were going to rent the small bedroom to a friend.  One of the women had a daughter as well a couple years behind the sons and they had every intention of her going to that same college and living in the house, too.  About 6 years after they bought the house, they sold it again (and for a decent profit) so I'm guessing their plan worked out.  I can see doing it when your kid is getting ready to go to college (particularly in a situation like that with two same age children going to the same college), but picking a place - a luxury place - when your kid is still in diapers?!?!

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...... but picking a place - a luxury place - when your kid is still in diapers?!?!

 

If the person have that kind of money in the bank, it becomes a rental investment even if their children might choose somewhere else when the time comes.  The prices here have come back up from the property slump so my neighbors who bought at near bottom could either continue being landlords or cash out.

 

E.g.   Alameda county where UCB is. Santa Clara county is where Stanford U is. San Francisco home price is always crazy. City of Berkeley and City of Palo Alto has crazy home prices for normal homes.

 

"Median Price  Feb-13 Feb-14  % Chng  

Alameda                   $372,000     $470,000      26.3%

Santa Clara           $554,000     $670,000      20.9%

San Francisco             $700,500    $945,000      34.9%"

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but having an asset the Chinese government can't seize in the future.

 

People are worried about possible turmoil in the country.  Imagine the Tiananmen incident on a national scale.  I have friends from China and Taiwan bought homes in other countries because it is their emergency evacuation plan as well as a possible migration plan.  Like my Taiwanese ex-colleagues say, any sign of war and they are going to sent their families out of the country. It used to be easier to emigrate to Australia if you own a home there.

 

"Teng confirmed that the UK, North America and Australia are the most popular destinations. "Generally, engineering, economics and business studies are the most popular among Chinese students. But for students who plan to emigrate or stay after graduation, they think more along the lines of the local employment market," he said." (Chinadaily)

 

"However, most wind up staying for the long term. Last year, Fujian's Overseas Chinese (Huaqiao) University estimated that only 497,400 of the 1.62 million students that arrived in the United States between 1978 and 2009 returned to the land of their birth. That means almost 70 percent of the Chinese students who came to the U.S. during that period made it their new home." (IBtimes)

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So when I think of international students coming to the US for college I'm just not imagining these sorts of numbers.

 

I know that many prosperous families in China move assets out of the country. But this is still hard to wrap my head around.

 

http://m.us.wsj.com/articles/SB10001424052702303779504579467522202091120?ref=/home-page

 

Huh, interesting! I guess it makes sense (for the investors) from many angles ...

 

 

If the person have that kind of money in the bank, it becomes a rental investment even if their children might choose somewhere else when the time comes.  The prices here have come back up from the property slump so my neighbors who bought at near bottom could either continue being landlords or cash out.

 

E.g.   Alameda county where UCB is. Santa Clara county is where Stanford U is. San Francisco home price is always crazy. City of Berkeley and City of Palo Alto has crazy home prices for normal homes.

 

"Median Price  Feb-13 Feb-14  % Chng  

Alameda                   $372,000     $470,000      26.3%

Santa Clara           $554,000     $670,000      20.9%

San Francisco             $700,500    $945,000      34.9%"

 

And these are large counties ... as you say, Berkeley (median $800k) and Palo Alto (median $1.8 million) have crazy prices -- AND, they have plenty of modest homes; they're not all mansions.  As a student, I rented a room in Palo Alto (within biking distance of campus) and it was in a normal house in a neighborhood of normal houses, similar to my parents' house but way more expensive.

 

And it's not just parents of future college students who are buying houses here ... Families are moving here so that their children can attend some of the excellent public high schools.  Local San Jose realtors are running ads in newspapers in China and India telling potential immigrants to “buy a home†in her Lynbrook school district because it produced “two Intel science winners.† My father came to the U.S. (Berkeley) for education and stayed; my brother is married to a Chinese woman who came to Stanford for a master's and stayed ... Immigrants are raising the bar, and I guess that includes real-estate prices!

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