Let Your Minneapolis Duplex Send Your Kids To College

diplomaI was visiting with a friend the other night who was lamenting the poor returns on the 529 college savings plans he had selected as a mean of planning for his childrens’ college educations.

The returns he was getting were miserable.

Of course, I asked whether he’d considered real estate as a tool for saving for college tuition.

With today’s depressed property prices and historically low interest rates, many single family homes, duplexes, triplexes and ing flowing better than they ever have.

In fact, many investors are finding they can actually finance the duplex with a 15-year mortgage at monthly payments just slightly higher than those on a 30-year amortization schedule.

As a result, many parents of young children are realizing real estate is a wonderful way to supplement or grow college funds.

If your children are young, and you purchase an investment property on a 15 year loan, it will have a significant cash flow by the time your kids are college age.

At that time, you can do one of two things; sell it or harvest the equity to have a lump sum for tuition.

Provided you purchased the property right and it cash flowed from the beginning, the only money you will have into it is the down payment. For 15 years, tenants would have been making contributions to your childrens’ college fund simply by paying rent.

Let’s say you bought it for $150,000. Fifteen years from now, even if the property never went up in value, you would have saved $150,000 in the college fund.

And while things are bad now and promise to be for some time to come, odds are that 15 years from now, that investment property will have appreciated somewhat in value.

Remember, you don’t have to buy the most expensive property to get started as an investor. There are many townhouses and condos on the market at affordable prices that would cash flow and be an excellent place to start your investing career.

And by the way, while this web site may be called Duplex Chick, I can write offers on condos too.