Why college kids are ditching dorms—and becoming landlords

Dorm life was a blast…at first. But by sophomore year, University of Portland student Shoji Mori was ready for his own place. At first, he and three friends paid $5,000 per month for an apartment. But after their landlord barely budged on broken appliances, Shoji’s mom crunched the numbers: Why squander money on a run-down rental when they could buy a home instead?

This is how Shoji landed in a $970,000 four-bedroom condo, and his crash course in being a landlord began.

“It was win-win,” says Klew Yeh Mori, a real estate agent in Salt Lake City. She knew the property would always find renters, given its proximity to campus. She also knew it would be a valuable learning experience for her son, so she put him in charge of home maintenance, paying utilities and taxes, and collecting rent from his friends.

“It was daunting,” Shoji admits. Sometimes, rent rolled in late. Then one of his roommates admitted his family was struggling to pay. With his mother’s blessing, Shoji trimmed $100 from his monthly bill, reasoning, “It’s more important to have good people than get paid full price.” He was also transparent about the discount with the other roommates, who were fine with it. “When you’re friends, it’s a different level of empathy.”

Shoji graduated and moved back to Salt Lake City this year. Even though he has a full-time job in engineering, he still runs this rental because it’s not only a cash cow but also “a good adulting experience.”

Why college homes are a smart investment

College towns have always been smart real estate bets. And now, rising tuition and housing expenses have pushed more families to stop paying rent and start collecting it instead.

“I try to explain to parents: You’re not investing in real estate; you’re investing in your child’s future,” says Bruce Ailion, an investor and agent who bought homes for all five of his kids when they went to college. “A common statement I hear from parents is, ‘I am paying less than the dorm for more space.’ You’re not just buying real estate; you’re buying peace of mind. You have to ask, ‘How much is that worth?’”

While some parents manage the property themselves, putting their kids in charge of certain tasks can be a learning opportunity. “It taught me how to handle large sums of money,” Shoji says—as well as the importance of having a rainy day fund for when the water heater breaks.

Still, Shoji’s mom wasn’t totally hands-off. She monitored the property’s bank balance to make sure the rent income wasn’t becoming a bar tab.

“I gave him a chance to prove himself,” she says. “And he did.”