| Investing in the School House |
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We vowed to put money away each month in a college fund, but there always seemed to be something more urgent or interesting to pay for, so we noticed my 11-year-old son’s college fund seemed to be growing at an extraordinary pace…extraordinarily slowly.
“College costs on the rise,” all the news headlines shout, and we started to get worried. After all, our son starts 7th grade this fall, so that leaves us just 6 years to pull together the money needed to send him off to receive his higher education.
“He’ll get a scholarship,” friends and family told us.
“He can get a low interest student loan like I did,” my husband said.
“He can work through school to help out with expenses like I did,” I said.
But what if none of that happens? What if he doesn’t get a scholarship, doesn’t qualify for a student loan, and doesn’t make enough money working part-time to substantially help out with expenses? What if he decides to go out of state for school? Well, not only will my husband pass out from shock that our firstborn didn’t choose our alma mater, the University of Tennessee, but out-of-state college tuition costs more…much more.
Then, I got an idea after attending a business conference this past winter. We’ll buy him a house for school. Yep. So that’s what we have done. We found a small house in decent condition in our neighborhood, and decided to make the purchase. The mortgage company worked with us to help us finance our investment, and we became real estate investors in May.
You see, I realized that in 6 years, using five percent appreciation as a guide, I may make $40,000 to $50,000 when I sell the place in 2012. I know that we will have maintenance costs over time that will reduce the amount we will actually make. These costs have already included calling in the pros to unclog a kitchen sink drain, refinishing the hardwood floors, cleaning up the yard, painting the interior, installing new light fixtures, and paying for a good property management company.
If everything works out like I think it will, using appreciation minus standard expenses, in 6 years, our gain will average out to be $300 to $400 a month. This is the case even though our mortgage is more than the rent, so while the renter is paying most of the mortgage bill, we’re not making anything on the house now. There is some risk involved as there is with any investment, but it feels good to invest in something I can touch. We may still have to rely on my son’s brainpower for scholarship dollars, and he may have to wait tables to make ends meet, but I think that it will build his character if he assists with the payment of college expenses.
I am told by my parents that my grandfather’s motto was, “You can’t go wrong when you buy dirt.” By this, he meant buying property, whether it is an empty lot that is nothing but dirt, whether it is a house sitting on dirt, or whether it is a commercial property built on dirt, that real estate investing is a good thing. They aren’t making any more dirt. Call your REALTOR to get your dirt today.
Claudia Stallings
Coldwell Banker Wallace & Wallace
