Rooming with a handily-placed relative would be the least expensive option, but that’s a highly unlikely happenstance for most parents. Residence is a possibility – if there is one and if there’s room. Renting has long been a popular choice. But in the current hot real estate market, you might be thinking about joining the parental trend to buying a condo or house for your youngster’s academic years.

At first glance, buying can seem a better option than renting. After all, why throw your money away on rent when you can eventually profit from purchasing a property? Sounds good, doesn’t it? But, when you take a closer look at the pluses and minuses of purchasing versus renting you may come to different conclusion. Here are a few of the things you should take into account:

Do you have sufficient resources? Consider financing your youngster’s post-secondary accommodations only if you have a solid financial plan and a readily available financial reserve. Recognize that the money you’ll spend on their rent or a mortgage is no longer available to purchase alternative investments.

Is renting really the cheaper alternative? It would seem so – but, real estate enthusiasts will tell you that’s short-sighted: when you buy, you build equity. On the other hand, renting can be a sensible decision because students typically do not stay in the same place after graduation. The costs of buying and selling a property can total up to 10 per cent or more of a property’s value. You should plan on holding a property for five to ten years to recoup those costs.

Will buying cause more problems than it solves? It’s difficult to identify a suitable property in a distant location. Finding a rental property is easier and you don’t have to worry about paying for repairs. If you do purchase a property you’ll likely want additional tenants to help pay the mortgage, taxes and maintenance costs. Odds are your youngster’s housemates will be solid citizens, but troublesome tenants do exist and you’ll be many miles away should problems arise.

Are you making a sound purchasing decision? Buy a student-housing property according to the same criteria you would use to select any other real estate investment. It should be in a good location and capable of generating a secure revenue stream, especially after your youngster moves out. If a condo seems like a better choice to you, be sure it’s well-managed and has a good reserve fund.

Be aware that any real estate purchase involves some longer-term risk. Yes, it is reasonable to expect to enjoy a profit over ten or 20 years, but real estate prices are cyclical and sometimes that cycle is down.

Does this real estate investment fit your asset mix? Look at your potential purchase in relation to your current investment portfolio. Proper asset allocation is vital because it determines as much as 90 per cent of your overall investment returns – and real estate should usually make up a relatively small part of a properly diversified investment portfolio.

You want to give your youngsters the best start in life – and financing their student accommodation is one way to help. But before you make the decision to buy or rent, talk to your financial advisor about the best choices for your situation.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact Jeff Colbourne, Investors Group Consultant at 403 220-9654. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Great West Life Assurance Company.