Your Tenants Will Send Your Kids to College

Parents, with children getting closer and closer to entering college, may also be feeling stress because they haven’t saved enough for tuition and other expenses. It’s estimated that the average cost for the 2015-16 school year is $32,405 for private colleges, $9,410 for state residents of public colleges and $23,893 for out-of-state residents.kids to college.png

If you started saving the year your child was born, you’d have to save $4,608 per year for 18 years at 5% to accumulate $129,620. If you waited until they were 10 years old, you’d have to save $13,574 per year to have the right amount. Saving enough can be difficult if you have a lot of time but if you only have a short time to meet your goals, it can seem impossible.

College costs.png

Student debt is one way to handle the tuition but many parents are reluctant to saddle their children with the obligation. Currently, there is more than $1.2 trillion in outstanding student loan debt to 40 million borrowers with an average balance of $29,000. Some economists suggest that this debt is delaying would-be buyers from making their first home purchases.

There is another way to pay for the education by making an investment in a rental property. Rents are continuing to rise, homes in owner-occupied neighborhoods are appreciating and the leverage due to borrowed funds can be a huge help in building the equity to pay the tuition.

Rent the home and maintain its condition over the years. As the loan amortizes and the value increases, the equity will grow. When your student is ready to start college, you’ll actually have several options.

You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education. Another option would be to refinance and take the proceeds to pay for the tuition. This would allow you to continue to own the asset but would free your equity. Under current tax laws, it is a non-taxable event.

In effect, your tenants are paying to send your kids to college.

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About abolastig

Antonio Bolastig is one of the most dedicated and committed real estate agents in the nation. There are many qualities and skills that go into being an excellent real estate professional - integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills and a high-quality professional network, all of which are hallmarks of how Antonio work. That said, in Antonio''s experience as a real estate professional, hehas also found that providing the very best service is essentially about putting his clients first. This means keeping himself accessible, being a good listener as well as a good communicator, and responding quickly to his clients'' needs. This "client first" philosophy has always been his approach and it requires him to continually improve his skills and ways of doing business. In addition, Antonio has found that the latest technologies are enabling him to do everything he has always done, only much more quickly and efficiently. They''ve also helped him to extend the range of services he provide to his clients. Antonio is backed by Realty Mark LLC, recognized as a leading real estate company with the most productive sales force in the industry. So when you decide that you''d like to buy or sell a home, please contact Antonio Bolastig.
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