529 plan or buy rental properties

2 Replies

I was wondering if I could get some advice from people who know something about finance and investments. 

I think most people on BP know that if done properly investing in real estate brings better returns then the stock market.  So, I was wondering if it would be better to buy 3 or 4 rental properties (average price say $75,000) and hold those for 15 or 16 years and then sell some or all of them to pay for college or put money away every year into a 529 plan.

Anyone have thoughts on this?

Thanks.

Earnings on the 529 plans would come out tax-free if used for qualified higher education expenses. I would factor this in versus any possible taxes on selling the rentals.

There is nothing to stop you from doing both. Putting money in a 529 for college and getting tax free earnings but investing outside of a 529 to keep some flexibility in what money can be spent towards. If the sole intent is to save for college and you are sure your 3 year old will go to college then go solely for a 529. If however you want to invest and your asking if rentals might be sold down the road to finance college for your kids sure but there will be taxes on the gain.

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