Many parents pay for their children and grandchildren’s education with profits generated from investing in real estate. So we want to share a Forbes article by contributor Brandon Turner, who is VP of Content at BiggerPockets.com, and is paying for his child’s college education by investing in real estate.
The Plan
The desired result of Brandon’s plan is simple: let tenants pay for his daughter’s college education.
Though this plan may sound too good to be true, many parents have done the exact same thing for generations, by investing in real estate.
Here are the basics:
- Buy a piece of property.
- Let his tenants pay off the mortgage over the next 18 years.
- Sell or refinance the property after it has been paid off.
- Use the proceeds to pay for the child’s college education or other endeavors.
To begin his journey, Brandon purchased a four-unit building in his area that needed a little work. After the rehab, the property was worth about $160,000. Taking inflation into account (approximately 3% per year), the property will be worth about $275,000 in 18 years, which is more than enough to pay for a college education.
Better yet, Brandon bought the property for no money out of his own pocket, not even a down payment. He used a private money lender to fund the entire purchase and rehab of the property. Once the property was completely remodeled, he refinanced the loan into a long-term, fixed-rate mortgage with a local bank.
Generating Passive Income with Real Estate to Pay for Your Kid’s College Education
In his article, Brandon gives four steps to paying for a child’s college by investing in real estate to generate passive income.
In brief, the steps are:
- Find and purchase the right property.
- Rehab it, so it’s attractive to tenants and yet durable.
- Select and hire a property manager, so the investment truly generates passive income.
- Refinance or sell the property to generate cash.
Related: Lifetime of Wealth with Passive Income
Using Investment Property to Educate Children
Finally, Brandon is excited about this strategy because it allows him to educate his daughter about real estate investing. As soon as she is able, Brandon will let his daughter run every aspect of the property, allowing him to train her to invest in real estate.
Perhaps you have done the same thing for your children and understand the advantages this gives them in various avenues of life.
To learn more from Brandon’s experience as a real estate investor, we recommend his article: How I Used Real Estate to Completely Fund My Kid’s College Education.
Graystone Investment Group
Graystone Investment Group is a real estate wholesaler of single-family and multifamily investment property. We help investors reach their financial goals by investing in real estate.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.
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