6 Ways to Pay for Your Kids’ College Costs Through Real Estate Investment | Private Equity Weekly

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The cost of college has become staggering.think $42,162 Average private college tuition for the 2023-2024 academic year.

This is enough to make many parents and children reconsider whether a degree is necessary in today’s world.

But if you do want to help pay for your children’s schooling, real estate investing can help. Try these six creative strategies to lighten the load—and maybe do double duty to help your retirement savings.

1. Let tenants pay tuition fees

Let’s say you purchased a rental property the year your child was born.To raise the money, you take out a 15-year mortgage, which probably won’t leave you with much money cash flow In the first few years. But as long as cash flow is positive, you’ll start making more money each year as rising rents are taken away from your fixed mortgage payment over time.

After 15 years, your tenant will pay off your mortgage in full. You now own the property free and clear and have 15 years to increase in value. You could sell the property and it would most likely be enough to cover all of your children’s education expenses.

Better yet, keep it and repeat the cycle again. Taking out another mortgage allows you to pocket 75% to 85% of the property’s value (to pay for school fees). Then make your tenant pay off the mortgage again.

Rinse and repeat as a source of retirement income for you and a tax-free inheritance for your children because the cost basis resets upon your death.

2. Multiply your portfolio using the BRRRR method

Imagine if you could recycle the same down payment to buy another property after another?

You can, but it requires some work on your part.

this BRRRR method Stands for buy, renovate, lease, refinance, repeat. You can think of it like flipping houses for yourself: You buy a fixer-upper home, renovate it, then refinance it with a long-term mortgage, keeping it as an income property.

Here’s the trick: When you refinance, you withdraw all of your initial investment, so you no longer have any cash trapped in the deal. You can do this because lenders use after-rehabilitation value (ARV) when calculating the amount you’re allowed to refinance.

That way, you can build a portfolio of 10, 20, 30 rental properties with the same $50,000. All the cash flows and appreciates from now until Junior goes to college.

This is a pursuit”unlimited returns” By recycling the same capital into multiple investments.

But that’s not the only way.

3. Unlimited returns from passive investing

On the plus side, you can repeat the BRRRR cycle every three to six months. In theory, you could recoup the same down payment four times in a year and end up owning four rental properties at the end of the year without any of your own money being tied up.

On the other hand, renovating a property requires a lot of work.Just ask any house flippersthey’ll tell you it’s not just a side hustle.

As an entrepreneur, a father and an expat, I no longer have time for these things. I just want to invest passively and let my money multiply on its own.

Fortunately, you can use the same strategy to invest in passive real estate. Here’s how it works: You invest in a real estate syndication, and they renovate the property. After a few years—during which time they want to pay you cash flow—they will refinance the property and give your capital back to you.

You retain an ownership interest in the property and continue to receive cash flow. As with the BRRRR strategy, you can recoup the same invested capital across multiple trades. Do this for a year or two and see how much cash flow you can build.

No, you don’t need a lot of money to invest in a real estate syndication. In our Passive Real Estate Investing Club, we work together on new deals every month, many pursuing unlimited returns.

4. Flipping houses with your kids

If you prefer investing in person, consider trading with college-bound teens.

Of course, you and they will make some money together, which they can use to pay for school. If one flip brings you $50,000 in profit, that might cover two years of tuition.

But just as importantly, they will learn valuable life skills. They will learn how to negotiate, how to invest other people’s money and how to calculate returns.

They will learn how to hire and manage contractors and, ideally, swing a hammer with a contractor to learn home improvement. They will learn how to handle permits and inspections and how to market and sell properties. The list goes on.

Most importantly, they will feel a sense of ownership of the education they are paying for. If they had to install tile all summer to afford it, maybe they would actually attend the 8 a.m. class.

5. House hacking through your children

Instead of paying for your son or daughter’s housing, why not have their friends pay for it?

You may understand the following concepts burglary, roommates or rent from a neighboring unit can cover your mortgage payment. What you may not know is that you don’t have to live in the property yourself – your adult children can meet the owner’s occupancy requirements.

Some mortgage lenders refer to these loans as “kid flat” loans. You and your children purchase the property together, with both parties signing the loan and appearing on the title.

You get an owner-occupier loan with a lower down payment and interest rate. But only your children must live in the property.

Picture this: You purchase a four-bedroom house, or even a small multifamily property. You rent out each bedroom at the going rate and your children manage the property. You’ll earn healthy cash flow on the property each month, and your children can live there for free.

When they graduate, you can decide whether to keep the property for ongoing rental income or sell it and reinvest elsewhere.

6. Click on your Roth SDIRA

A Roth IRA is very flexible because you already pay taxes on it. You can withdraw your donation at any time without penalty.

You can also withdraw your earnings tax-free and penalty-free until age 59 1/2 qualified education expensesinclude:

• Tuition and Fees
• books and supplies
• Equipment required to attend
• Special needs related to attendance

and comes with a self-managing iraayou can invest in real estate.

Of course, this could mean purchasing an investment property, or you could invest in passive real estate, such as notes, funds, or real estate syndicates.

Use creative combination strategies

There are countless ways to invest in real estate, often as a portfolio investment.

Roth IRA investments grow tax-free, which makes it an especially good place to hold investments for unlimited returns.

Imagine you combine seller financing Use the BRRRR method so you don’t even have to invest a lot of your own money – or flip the land Or invest in a mobile home park or buy a distressed mortgage note or wholesale property.

In fact, you can pay for your kids’ college education using the same real estate strategies you used in the past early retirement. Get creative and find one or two perfect strategies that you want to master, then practice until tuition concerns become a distant memory.