How to Pay for College Using Real Estate

By Jaren David Barneshow-to-pay-for-college-using-real-estate

So there are some basic things about real estate you want to learn about before you go out and purchase your first investment property; however, we don’t have time to discuss those here.  With that said, what I’m going to show you is how using real estate — moreover, being a landlord — can be an incredible means to pay for school.

The best course of action for this, in my opinion, is to purchase a small 4-unit apartment using a conventional FHA loan, so that you only need 3.5% of the down payment to get the property financed.

Initially, you are going to live in one of the units while renting out the additional 3 (living rent and mortgage-free, mind you) for the first 2 years. Then, in the second half of your studies, you are going to move out and rent out all 4 units.

You’ll be saving ALL of your net revenue in the process, and a year and one month after you graduate, school will be completely paid for


How Much Does a Bachelor’s Degree Really Cost Me?

The average bachelor’s degree consists of 120 credit units. On average, school tuition costs around $500 per credit unit. So if you divide 120 units over the duration of 4 years, you get 30 units per year, and there are typically two semesters per academic year, so 15 units per term adding up to, 15 x 500 = $7,500 per semester, multiplied by 8 (two terms for four years of school), and you end up having a total payment of $60,000

Before You Start College, Work Like an Animal!

So we are going to be purchasing an investment property prior to enrolling in college, right? That means you need a couple thousand dollars for a down payment! How? Good, old fashioned hard work!

Work a Few Jobs… Period

If you are like how I was when I was fresh out of high school, you probably don’t have any work experience, so you may need to work several jobs in order to make this happen.

The final addition to this is on the weekend, be proactive about odd side jobs you can do, like mowing lawns, washing cars, stenciling house numbers on curbs, etc. to make a few extra dollars.  One brilliant idea is if you troll the free section on Craigslist,where you can usually find items that you can turn around to resale as-is, right back on craigslist.

If through odd jobs you can average an extra $300 per weekend, that would bring your monthly income to $3,760 ($300 x 4 weekends = $1,200), and if you saved EVERY penny, you could have your down payment in three and a half months.

I Have My Down Payment. Now What?

So now it’s time to sync up with a lender who is savvy with FHA financing.  Once you get pre-approved for your amount-you may need your parents to co-sign in order to get approved -you start shopping around. Once you have found the perfect property, you move into one unit , rent the others, and start school. At this point, you are now living mortgage free, going to school and working only part-time to cover your living expenses.


The First and Last Set of Two Years

Like we said near the beginning of this post, for the first two years, you are living in the property — one, to satisfy your FHA requirement and secondly because it’s a great money saver. During the first two years of school, you have saved ALL of your net income from the property (24 months x $423.15), totaling $10,155.60.


Now, you decide is time to just bite the bullet and work full-time while going to school full-time, so you can afford another place (or if mom and dad are nice, they can let you move back home), so you can rent out your fourth unit.



You see, it is typical for real estate properties to go up in value over time.  Banking on this is dangerous because you never know if the market is going to tank, but over the long run, real estate has always gone up, historically.  So, if things are looking good, you may decide to sell the property at graduation, and chances are you’ll have enough equity to cover remaining school costs and then some!

Now, all the cash flow you’ve saved up, that $43,117.68 could be used as a down payment for bigger and better real estate investment (or a killer road trip to celebrate you graduating debt-free!).


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