College-area homes make the grade (© David P. Hall/Corbis)

© David P. Hall/Corbis

Checklist as your teenager heads off to college: Don't forget to: a) pay the tuition; b) have the safe-sex talk; c) have the drinking-and-driving talk; and d) buy your student a house or condo.

Pardon the whiplash on that last one, but the fact is, many parents who are financially able to do so are choosing to invest in real estate close to campus for their college-bound offspring. In many cases, it's preferable to shelling out dormitory fees or apartment rent.

Statistician Walter Molony of the National Association of Realtors estimates there are about 3 million campus houses and condos in America today, properties that were purchased primarily for the owners' college-bound students. That represents about 8 percent of the nation's 37.4 million investment properties, but excludes 6.8 million vacation homes, which don't tend to be near college campuses.

Although the NAR doesn't track campus-area housing prices per se, Phillip Filardi, a real-estate agent with Keller Williams Realty who specializes in properties near the University of Texas at Austin, will attest that Longhorns with their own digs are living large.

"It's amazing the number of parents who are able to come in and buy a $200,000 or $300,000 condominium, or even a $400,000 or $500,000 house for their children right around campus," he says. "I've had any number of parents tell me, 'If I'm going to spend this kind of money every month to house my children, I might as well buy an investment property and get some return.'"

For students, a campus house or condo can offer greater freedom, a choice of roommates and more amenities, including a full kitchen, private bath, deck and hot tub, cable and Internet connectivity, and covered or enclosed parking.

For parents, it offers a chance to not only recoup some of the skyrocketing cost of the aptly named higher education but, if approached correctly, can even launch their baby birds into the world with something college can't provide: a good credit history. Even parents of limited means can derive many of the same benefits by co-owning a campus house with other parents.

One additional bonus: That campus crib might keep the kids from "boomeranging" back home, as nearly half of this year's college graduates plan to do, according to a survey by online career resource MonsterTrak.

Fear factor
As the owner of a campus house, you have goals similar to those of any landlord. You want a property that you can keep fully occupied and that will produce rental income to at least cover your costs (mortgage, taxes, insurance). You also want to be sure you have signed leases and security deposits from every renter.

What scares many parents — and keeps the dorms full — are the unknowns. What if I can't rent it? What if my kid drops out? What if the housing market suddenly flatlines? What if? What if? What if?

After all, not only is that campus home often their first rental property, likely located in another town or state, but that four- or five-year time horizon can prove uncomfortably tight for appreciation purposes.

Robert Sheehan, consulting economist for the National Apartment Association, had a good experience. He bought an old four-bedroom Victorian in a reviving neighborhood of Richmond, Va., for his daughter to live in while attending Virginia Commonwealth University. He never had to make a payment for an errant roomie, and after graduation, sold his daughter the house with easy terms. She and her husband now own 14 high-end properties.

But Sheehan didn't repeat the process when his son enrolled at Carnegie Mellon in Pittsburgh. Why? Carnegie Mellon provided better digs less expensively than he could have purchased.

"He lived in a two-bedroom apartment on campus that was 1,600 square feet," Sheehan says. "Where he was in Pittsburgh, where you have five universities in a several-block area, it was tough to find places that you could buy that easily."