{"id":101130,"date":"2018-08-06T14:30:47","date_gmt":"2018-08-06T20:30:47","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=101130"},"modified":"2024-02-24T13:04:49","modified_gmt":"2024-02-24T20:04:49","slug":"real-estate-offset-cost-of-kids","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-offset-cost-of-kids","title":{"rendered":"4 Ways Real Estate Can Help Offset the Staggering Cost of Having Kids"},"content":{"rendered":"

You are probably reading this article because you have kids\u2014or maybe you want them someday. If you’re already a parent, you know the indescribable love you feel holding your new little one. Once you stop floating on cloud nine, though, you’ll quickly snap back to reality when you start adding up your new expenses\u2014baby products, child care, clothes, baseball, dance costumes, education, and much more. You aren’t alone if you worry about how to afford it all!<\/p>\n

According to a 2017 study by the U.S. Department of Agriculture<\/a>, \u201cThe cost of raising a child today [to age 17] is $233,610\u2014excluding the cost of college\u2014for a middle-income family.” As if that isn\u2019t scary enough, this number doesn\u2019t take into account inflation, so that adds a little extra salt to the wound.<\/p>\n

As parents, we naturally want to give our kids the best we possibly can. We splurge on cute baby outfits, we buy ridiculous presents for their birthday, and we spend money on random activities or events for them. However, what is the price tag of a child\u2019s happiness? Are you becoming broke just to pay for it?<\/p>\n

Now don\u2019t get me wrong: This article isn\u2019t about how<\/em> to raise your children, but how to afford<\/em> the way you want to raise them.<\/p>\n

Trust me, I get it. My kids are only three and one, and I want to give them the world\u2014which is exactly why I am investing in real estate. Here are four ways I think real estate investments can help offset the staggering \u201ccost\u201d of having children.<\/p>\n

4 Ways Real Estate Investments Can Help Fund Your Kids’ Upbringing<\/h2>\n

1. Start a college fund.<\/h3>\n

Arguably the biggest expense for your children is the cost of college. My husband and I are using the same method Brandon Turner describes in his article<\/a> to pay for our kids’ college tuition. We bought a duplex the year our son was born for $68,500. Even though we paid for the down payment ourselves, an investment of roughly $17,000, that duplex will appreciate to roughly $117,000 in 18 years (with the note being paid off in year 15). If we choose to sell it if he goes to college, it can be sold free and clear. We applied the same concept when buying a triplex for our daughter.<\/p>\n

Other investors we know are flipping houses and putting most, if not all, of the profit in a savings account for college. Think of it this way\u2014if you flip one house every year for 18 years and \u201conly\u201d make $10,000 each flip, that\u2019s $180,000 you will have earned towards their college tuition! Combine that with a few rental properties, and you will have tuition paid for in no time.<\/p>\n

What is the cost of college these days? That number will look very<\/em> different based on the degree type, location (in state versus out of state), amount of time spent in school, public versus private university, etc. If you want your little one to go to your alma mater, go check out their current tuition rates online. For those who have no idea what type of post secondary education their child will pursue, the U.S. Department of Education\u2019s has a pretty cool online calculator<\/a>.\u00a0After it scares you a little, it might help you budget and set an investment goal.<\/p>\n

2. Pay for extra-curricular activities.<\/h3>\n

Right now, I\u2019m enjoying our evenings free of running to extracurricular activities. Toddlers might be impulsive and destructive, but their social lives are basically nonexistent compared to their school-aged counterparts. I see parents with school-aged children arranging after-school pick-ups, dinners, drop-offs, carpools (and more!) in an ever-changing scheduling nightmare.\u00a0 Whether your kids are in one activity or 10, those clubs probably all come with a price tag. Add more than one child into the mix, and I\u2019m sure the costs per month really add up.<\/p>\n

If your child\u2019s after-school activities are costing you a few hundred bucks a month, a rental property could be a great way to cover, or at least help out with, these expenses. For example, if you own a duplex that cash flows $150 per door ($300 total) per month, and Junior\u2019s traveling baseball league is $200 a month, then you can cover the cost of baseball while still saving some cash. You could also use the cash flow as a limiting factor to what activates your child can do\u2014once the cash flow runs out, so do the activities!
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\nRelated:<\/strong> 5 Ways to Teach Your Kids About Finance & Investing<\/a><\/em><\/p>\n

If you\u2019re like me and your kids aren\u2019t old enough to be involved in after-school clubs, you can apply this method to help offset child care\/daycare costs!<\/p>\n

On a personal note, I would recommend any cash flow be redirected immediately back into your business, but to each their own. I realize not everyone\u2019s business model is to grow and scale their portfolio, and that\u2019s OK! If you want use real estate to offset some family expenses, go for it. Check with an accountant and\/or a lawyer on the best ways to transfer business funds into your personal account.<\/p>\n

3. Offset family vacation costs.<\/h3>\n

If after-school activities aren\u2019t your kid\u2019s thing but traveling is, you might want to look at using real estate as a way to decrease costs on family trips. There many ways you can work vacationing into real estate investing, so I\u2019ll just highlight a few:<\/p>\n