Let Your Tenants Send Your Kids to College

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Most people have lots of reasons to save but not always enough discretionary income after the family essentials have been met.

A relatively small investment in a rental home can control a good home that will rent easily, generate positive cash flows and pay for itself.  The borrowed funds create leverage that earns a return on the total value of the home and not just the amount of cash you have invested.

The strategy is simple.  Find a slightly below average priced home that will rent well.  It will appeal to a larger group of people while it’s rented and when it’s ready to be sold.

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 and under current tax laws is a non-taxable event.

Regardless of whether you’re trying to plan for your children’s education or your own retirement, rental property offers many solid investment opportunities.  All investments contain risk.  Knowledge and expert advice from tax professionals can reduce the risk.  Contact me if you want more information.

 

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About Joann Samelko, REALTOR®

Hi, I'm Joann and it is my pleasure to serve your real estate needs. I am a Licensed Realtor and have been Licensed as a Broker since 2002. My business focus is on helping buyers and sellers with their real estate needs and goals. I enjoy working with first time homebuyers, people relocating to the area, individuals making a change in their lives, and of course, my former clients and friends. My Designations include the ABR (Accredited Buyer Representative), ASP (Accredited Staging Professional), CRS (Certified Residential Specialist), GRI (Graduate of the Realtor Institute) and SRES (Seniors Real Estate Specialist). In addition to working with buyers and sellers I am also the Director of Relocation for Northside Realty. Prior to becoming a Realtor, my background includes over 20 years of sales and sales management experience in the corporate world.

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