Recently, I’ve helped two separate recent college graduates with strong income and credit to purchase their first home. Both of them are taking on friends to live in the house as tenants and help with the monthly mortgage and utilities. With the exorbitant amounts that colleges charge for on-campus housing, the $1,000 to $1,200 a month for a room in a big house with a nice living room and kitchen seems like a steal to these renters. In addition, the problems of apartment living with parking, noisy neighbors (sometimes on all 6 sides) and a non-responsive landlord go away. It’s a win-win for everybody.

Both of these young professionals are looking ahead to the fact that they won’t be living in this home forever. We’ve had the discussions about 1) selling the home for a profit (with serious tax benefits to selling a primary residence) or 2) keeping the home as an incoming-producing rental property or 3) turning the home into the residence for their family once they get married and have children. In choosing a home that may fit into all of these categories, the thoughts about flexibility of the home plan must be considered. For instance, en suites are a huge plus so that tenants are not sharing a bathroom. In addition, separate outside entrances can be a plus as well. Another consideration is the location of load-bearing walls. If the home is to be converted to a family residence, sometimes opening up the plan is the way to go.

Of course, it doesn’t hurt to have family members or friends to lean on for advice (and cheap labor) when looking at a property for this purpose. I would always advise that you get a 3rd party inspection of the property, though.

Another option could be to pool resources between several friends and buy a property together, forming an LLC or LLP to own the property and share the mortgage and utility expenses. Of course, some talks with a real estate attorney and CPA would be a good idea in this instance. Personally, I own a share in a lakeside community that is owned by a corporation which has one share for each lot occupier. At the time, this was the only way we could purchase such a large property from the government. We have annual meetings where we handle our corporate business, and it’s been pretty well managed for over 20 years now. It can be done, if you have people willing to work together. has a great buy vs. rent calculator that you might want to check out:…