You may have considered planning for college if you have children or grandchildren. Perhaps you are going to school yourself and are looking for a way to help offset your costs. The costs of tuition and living are high for students. The costs of going to school can be covered easily by investing in real estate right now. In our latest post, we offer tips to start college planning using real estate in Austin!
How Much Do You Need To Save?
This is dependent on the school and your child’s living situation. Even if college isn’t in your kids’ plans, starting out in the world with a small nest egg can help them find the path they’re meant to be on. Starting early will help the amount grow over time, and even a few thousand dollars can get them off to a good start.
Real estate returns are high. Your investment is likely to outperform the stock market at over 10% annually when it’s managed correctly. Every property is different, so have a firm goal in mind. If you aren’t getting any returns, sell it for a better performing property!
What Kind Of Austin Property Should You Buy?
This depends on what you are comfortable with. Single-family rentals perform well, but a multi-unit building might be the way to go if you’re ready to take on more. It’s important to make sure that you are purchasing a property within your means – regardless of how you invest. Don’t over-extend yourself for the sake of a long-term investment.
One option is to use an FHA loan to purchase a 4-plex with 3.5% down. After living in a unit for two years, you would then have the option to rent out the 4th unit as well. While living there, you should essentially be able to live “rent free” as the other tenants’ monthly rent payments cover your mortgage payment.
How Do You Maximize Your Money?
You can maximize profits in a number of ways.
- By selling the house at the right time
- By generating top dollar for your rental property
- By refinancing (you’ll pay interest but avoid tax penalties such as capital gains taxes)
You could purchase a home and rent it out, using the tenant’s payment to cover the mortgage for a few years. Sell or refinance once the property is paid off, then put the proceeds toward college or anything else.
Another awesome strategy to help your college kid is to purchase a rental property for them to live in. A single-family house with multiple bedrooms or a small multi-family property would work. The rent should cover the mortgage, your child’s room and board, and may even bring in some extra funds for books and supplies. When they are out of school and the property is paid off, it could be sold to help finance a home of their own.
One of the biggest benefits? A great example.
Showing what can be accomplished by planning is an amazing life lesson that your children won’t forget. You are never too young to become well versed on smart investing practices. By sharing the tools and benefits of smart real estate investment coupled with hard work, your children are gaining the knowledge to plan for their own future.
Interested in using real estate to pay for college? We can help! Send us a message or give us a call today! (512) 345-9090