Every fall about 20 million college students go off to school in the United States. That means paying for college is just around the corner for many parents. Yikes! Yes, if parents put aside $250/month for the last 13 years they would have nearly $44,000 socked away in a college fund (assuming average growth of 2%/year)…or almost $90,000 if they put away $500/month for the same period. But admit it. Not every parent has done that for each of their kids.
It’s never too late to cut the cost of college
Now there’s another way to cut the cost of college…especially for parents whose savings is a bit short (or their offspring chose an expensive out-of-state or private university): Invest in college real estate.
Timing is everything, say the experts in college rentals. First, be sure your scholar has settled into their university for the long haul (41% of entering first-time, full-time students at a 4-year institution don’t complete a bachelor’s degree at that institution in 6 years, according to the National Center for Education Statistics). Let them scope out their college town and be your eyes and ears. Some neighborhoods make better rentals than others (such as bus routes, parking or walking distance to the right side of campus). Other college towns allow rentals more than others.
Second, use your savings (or equity in your home) as a down payment for a college-student pad with extra bedrooms. Those extra bedrooms (ideally 3-4) can be rented to other students to offset the mortgage payments if parents don’t buy all cash.
Third, use a top local agent to find a perfect property (ask your hometown agent to refer you to a quality agent in the college town through their affiliate networks).
Fourth, hold your investment for the long term. Picture this scenario: Invest $23,500 in a $100,000 college rental. Then, assuming 3% appreciation and rent of $1,000/month to pay expenses, your equity position could be about $83,000 after 13 years. Not to mention all the dorm fees and housing expenses you’ve avoided. Of course, real world results will vary. No question managing student rentals requires parent/investors to expect needed repairs, and the risk of rental properties is higher than regular savings.
The key is – even though your savings are not what you hoped – you can still cut the cost of college with some savvy investing. To maximize your chances of good results, read Smart Essentials For College Rentals by Dan Gooder Richard (available on Amazon.com) to get the inside skinny on exactly how you can beat college costs with a student rental…even if you haven’t saved enough in the meantime. Then contact your local real estate professional and get a referral to a top agent in the college town your scholar has chosen. You’ll go to the head of the class.