5 College Towns Where Buying a House Creates Long-Term Passive Income

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Although staying in a campus dorm is often the norm for college students, room and board averages about $12,302 per year at four-year public universities, per the Education Data Initiative. That means owning a home could not only save you money but also generate passive income.

Mortgage Research Network reviewed 121 college towns and identified 23 where buying and keeping a property for 10 years could pay off. 

For success with this strategy, analysts recommend looking at schools where room and board runs high and home prices are relatively low. They also advise avoiding towns with expensive property taxes or slow appreciation, and setting up the loan so the student is the primary borrower and can qualify for better owner-occupied rates. 

Here are five college towns where long-term homeownership can help you save money and make a profit. 

Philadelphia, Pennsylvania (Temple University)

• Median home value: $234,799
• 3-year cost to own: $21,162
• 3-year cost of room and board: $50,904
• 10-year profit: $73,030

Owning a home near Temple University saves about $30,000 over three years compared to paying for room and board. Additionally, families who hold on to the property for a decade can realize profits of more than $70,000. Profit figures are based on room and board costs versus the expense of owning a home, plus home appreciation and rental income after the student graduates.

Huntington, West Virginia (Marshall University)

• Median home value: $137,909
• 3-year cost to own: $19,751
• 3-year cost of room and board: $38,556
• 10-year profit: $33,690

For Marshall University students, buying a home instead of paying room and board reduces costs by almost $19,000 over three years. Over 10 years, the projected profit is close to $34,000.

Newark, Delaware (University of Delaware)

• Median home value: $365,150
• 3-year cost to own: $27,818
• 3-year cost of room and board: $44,514
• 10-year profit: $67,366

Families who purchase a home for their University of Delaware student can save about $17,000 in three years compared to the costs of paying room and board. Additionally, keeping the property for 10 years can add up to nearly $70,000 in profit.

Tuscaloosa, Alabama (University of Alabama)

• Median home value: $227,250
• 3-year cost to own: $28,167
• 3-year cost of room and board: $44,520
• 10-year profit: $32,598

Buying a home near the University of Alabama costs about $16,000 less than room and board over three years. Plus, owning the property for a decade can result in $32,000 in profit.

Memphis, Tennessee (University of Memphis)

• Median home value: $151,722
• 3-year cost to own: $15,861
• 3-year cost of room and board: $31,032
• 10-year profit: $51,053

In Memphis, families can save more than $15,000 over three years by owning a home instead of paying for room and board at the local university. After 10 years of home ownership, profits can total around $51,000.

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