Most parents of college-age students know the tuition package is just part of their sticker shock. Dorms and meal plans represent another steep rite of passage.

But there’s also the option to invest in a residence within close proximity if their student lives off campus. In fact, even folks without college kids can see the value in this type of investment.

Education-based Real Estate
With the rising costs of housing and meal plans, the investment offers a way to match – or beat – expenses while hopefully enjoying appreciation.

If a multi-room property is bought, it can provide housing for other students, which helps offset mortgage payments and other ownership costs. If the condo or house is nice enough, it might appeal to faculty, local renters or summer vacationers when students and staff are away.

Some parents have found the investment so worthwhile that they hang onto it after their child graduates. Lynn and Tim Cattrysse did so with the one-bedroom condo they bought in Cocoa Beach, Fla., in 2001 Their daughter, Jill, then a student at Iowa State University, spent time at Florida’s Kennedy Space Center as part of a cooperative school-work program. After Jill graduated, her parents kept the property, since its oceanfront locale proved appealing to vacationers.

Because they live a plane-ride away, the couple purchased in a location that has on-site property management. For finding renters, they rely on HomeAway.com, an online vacation rental market based in Austin, Texas. The company charges an average annual fee of $300; others place newspapers ads or use Craigslist or similar services. The Cattrysses break even, Lynn says, and believe their initial $89,000 purchase has appreciated to about $175,000.

With most fall classes on the horizon, here are some things to know if weighing this option:

Know your potential pool
“Every college campus works differently. At some, professors and students live on campus, so be sure there’s a market,” says Steven J. Thayer, a Chicago real estate attorney.

Know your child’s ability – or others’ – to manage the investment. Author Tom Kelly rented a house near the Loyola Marymount University in Los Angeles for his second son, which worked fine until he studied in New Zealand. “Others in charge didn’t take the same care. We should have rented it to faculty,” says Kelly, author of “How a Second Home Can Be Your Best Investment’ (McGraw-Hill, 2005).

Buy for the long term
“You have to pay, on the front end, the purchase price, plus attorney and closing fees, and on the back end, the sales commission,” Thayer says. “So the longer you own it, the better.”

Buy a larger place, if possible
It makes sense to buy bigger, so it appeals to a family or several students, which adds income, says Christine Karpinski, director of the Owner Community for HomeAway.com. Jim Leonard, who purchased a condo near downtown Austin for his son, agrees. “A one-bedroom isn’t as rentable for those coming in summer,” says Leonard, who runs a video production company.

Get a year’s lease rather than school-year lease
An exception is if you know you can attract summer visitors, who may pay more daily, weekly or monthly basis, says Karpinski. Charge students rent comparable to the dorms, says Kelly.

Take a healthy security deposit, get references, have parents guarantee the lease.
Lou and Claudia Ramondetta take a month’s rent for the deposit on their cottage by Scarborough Beach in Narragansett, near the University of Rhode Island.

Have tenants pay incidentals
These include everything from cable to heat and electricity.

Remember adequate liability coverage. “You’re ultimately responsible, even if you insist that no ‘Animal House’ parties are held,” Thayer says. He recommends excess liability.