Parents buying apartment for child attending Columbia University / NYU

 

Parents buying an apartment for a child attending Columbia University or New York University (NYU) is a strategic play that many of our clients do. Indeed, the cost of sending a child to one of these prestigious New York universities is already very high. To buy a condo apartment dramatically increases the cost. Why do it? Here is how we analyze the situation of whether to buy a condo for the student attending college.

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Foreign / Overseas parents of New York University, Columbia students. Buy Manhattan property?

For affluent parents of students attending NYU or Columbia, a common question is whether to buy a condo investment property in Manhattan for their child to live in.  Of course, there is no right answer.  Here are high level pointers:

* Staying at the dorm is more expensive than renting an apartment outside.  The dorms, along with the meal plans are revenue streams for the universities.  Columbia and NYU are major landlords and own many properties, land and buildings.  They understand the benefit of owning.

* Renting is the lowest cashflow option.  It's cheaper than staying at the dorm and does not require the large capital outlay associated with buying.

* Buying a condo or building is obviously the long term wealth building strategy.  In this market (because prices have depressed enough).  However, Manhattan property requires tying up at least 40 percent down to break even with rent.  This is capital that may be more productive in another investment.