Property Grunt

Saturday, July 16, 2005

Professors on the Hunt

Joyce Cohen has another fantastic column that people in the academic field should take note of.

Its about Thomas and Katherine Cole who decided to move from their home in Haven to Manhattan. Mr. Cole was a professor at Yale and Mrs. Cole also has a Yale connection as a grad student there it was where she met Mr. Cole who was a professor there until his retirement 5 years ago.

I think the smartest thing this couple did was that they purchased a home in 1975 for $40,000 and received a full-price offer of $469,000 on their house instead of using university housing. Universities usally offer housing to their faculty and it is actually one of the key incentives universities use to lure professors onto their campuses.

NYU is considered to be one of the biggest real estate owners in all of Manhattan. That type of leverage has enabled them to get the cream of the crop since housing is a big deal for most professors.

Columbia has finally jumped on the bandwagon and has been purchasing everything within their vicinty. Heeding the calls from their own faculty they also began construction of a new k-12 school for their professors and administration.

However there is a catch. Depending on the school, housing is not free and even if it is the colleges have a way getting their money back from their own staff. NYU charges rent for their housing to their faculty and administration and once a professor retires they are out of there.

The Grunt showed a rental to a couple who were residents of NYU but since the one who worked for NYU was retiring they needed to find other options and were at the mercy of the market. The Grunt knows one professor who deferred the housing option to buying a home an hour upstate an hour away by metro north. This professor made the decision to buy because he wanted his two dogs to have a yard to run around. He is really happy about his dogs since his home has appreciated quite well since purchasing it and he plans on retiring very soon instead of running around like his colleagues for a place to live.

Academics, particuarly professors have an extrememly difficult time when it comes to real estate. Even after graduate students complete their studies and earn their Phds their employment options are unpredictable since it depends which schools have availabilities. And tenure is not given out freely. Even if a professor spends a signifigant time and effort at a college or university it does not guarantee that they will get tenure.

So what is a professor to do? The ideal situation is to do what the Coles did which is to build equity in the vicinity of where they work. However there is a caveat because certain colleges may not have the best housing market so it might be best to utilize university housing.

If it is not an option to buy within the area then they should still look for a home whether it is a house or condo in order to build equity somewhere they are comfortable with. While they are living on campus they can rent out their home to offset the mortgage and when the times comes they can vacate their home settle in after their retirement. The objective is to prepare for retirement and it is never too early to for that.

For the academics who have just graduated with their Phds and are saddled with school debt and looking for an adjunct position. You should definitely start looking and begin to formulate a strategy involving home ownership. Bear in mind, you need to beat that student loan debt.