Investing in Real Estate Before Grad School in Another City

4 Replies

All – my name is Joey Gross and I am considering purchasing my first buy-and-hold property in the Chicago area in the next year. However, I am only a few years out of undergrad and I am considering getting an MBA in the next 2-3 years. I am going to look at programs all over the country – it’s possible that I may end up somewhere like Philadelphia or Boston to continue my education.

Does anyone have experience with owning property / being a landlord for a duplex/triplex in one city when you are living (as a student) in another city? A real estate investment can generate cash flows that can be applied to my tuition, but I am also nervous about owning a property (w/o a property manager) and residing hundreds of miles away from my investment.

Thanks in advance – any guidance is much appreciated. 

Trying to self manage from a distance will be a challenge.  Who will show the property when it is vacant? That alone could cost you round-trip airfare to fill a unit and could easily happen at very inconvenient times because Murphy's Law.

@Joseph Gross Great idea! A lot to consider though...qualifying for a loan with little to no employment will be difficult especially if this is an out-of-state investment property. Of  course there are ways around this but just worth stating that conventional lending could be a problem.

An MBA will increase your debts and will further hurt you when speaking to said lender (possibly even worse if current student loans are bad).

Down-payment will be tough, but that's just based on my assumption that you're a typical broke college kid like I was lol

Lots of barriers to this type of investment at a young age but not a bad idea at all...have you thought about house hacking in the city you will attend grad school?

@Steve DellaPelle and @Aaron Klatt thanks for your help.  I understand that there are a handful of obstacles if I decide to pursue purchasing an investment property with grad school in the future.  I am currently employed full-time and have enough cash on-hand to afford a down payment now.  My biggest concern is the management of the property - I could hire a property manager, but that would diminish the cash flows & returns that I am trying to earn towards my MBA tuition cost.

Ultimately, I need to determine if my current cash should be applied towards an MBA program (so I can exit with little to no debt), OR if that cash should be used to purchase a property that can generate cash flows to cover most of my MBA expenses.  Worst case scenario, I wait a few more years and invest in real estate once I have completed my MBA program.  

@Joseph Gross in that case compare the ROI on an average investment property to the interest rate on your student loans. If the loans are higher that is probably a better application of cash a penny saved is a penny earned. But if the ROI on an investment property is much higher, that may be the way to go.

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