Buying Property for future College Savings

6 Replies

Good Morning, 


I have been kicking the idea of real estate investing around for a good 15 years with no progress. My wife and I recently started to revisit the discussion of how to get started. Right now we are putting a large amount of money away every month for college savings for both of my children (aged 6 and 2). Instead of doing this, I had the thought of buying two properties and have renters pay down the mortgage over the next 15-20 years enough that I can use the equity to pay for the education.

Thoughts? Has anyone done something similar?  

Whats the best way to start?

Brandon Turner from the BP podcast does this. He buys a house for his children, pays it off with 15 yr mortgage via renters, and the rental proceeds can go to paying college. Or sell and the equity would pay for it. Great idea!

You got the right idea! 

There are multiple investors on BP who do this exact same thing. I remember Brandon turner wrote a blog post about the 4 plex he bought for one of his kids. I do not have the link, but if you search for it I bet you can find it.

I would suggest you go out and buy a property with a 30 yr mortgage but set it on an 18 yr pay off schedule. This just gives you more flexibility than a straight 15 yr mtg.

Once the property is paid off by your tenants, you can either cash out refi or sell to pull out your equity.

-BA

@Jason Stephens

We’re doing this. Fixed up some duplexes and they cashflow well. We’ll cash out refi them after college is finished and also after they’ve funded the purchase of the rest of our fleet with the cashflow for the next 18 to 20 years.

It’s much easier to save when you are getting paid to do it.

@Jason Stephens

I plan on doing that as well for my child. My neighbor owns 21 properties, and has 4 daughters. He said when it was time for them to go to college, they used the funds for that while the rest used that money to re-invest and use it for their business. It’s a great way to save money while your equity is going up