How To Leverage Real Estate To Enrich Your Child's Education
Real estate has grown at a steady pace over the last few years, and, coincidentally, so has the cost of college tuition. Our firm recently asked landlords how many were investing in real estate as a way to fund their children's education, and 24% of respondents said that they were actively investing in property as a way to pay college tuition.
Rentals can provide an appreciating asset that also has a monthly cash flow to help with college expenses now, as well as those that will come along in the future. I bought my first investment property at 14 and haven’t stopped. As one of 13 kids, my siblings and I all learned how to labor at construction sites because my father was a contractor. I was determined to be a direct source of income for my family since I was fully aware of the money we didn't have.
From those experiences, I learned that an investment property isn’t just a revenue generator. It can provide so many opportunities to teach our children life lessons while helping to save for their future.
The Rent Is Too High
As parents, grandparents, neighbors, friends or mentors, discussions with others about real estate are ubiquitous — so we really have no excuse for why we aren’t sharing our learned real estate insight with a younger generation.
Whether you are about to purchase an investment property or already have one, the basic fundamentals of rent are a priceless lesson to teach your children. As a landlord, you are collecting rent, and if kids only see you collecting rent (and not paying the bills that follow), how will they understand the rent is there to cover the many costs that go into owning a rental property? A mortgage may seem like a simple concept to you, but for a teen, the idea will be very new. Learning how interest rates work and hearing the story of how you locked in the rate you’re paying on your rental property is a priceless education. Plus, you never know how well you understand something until you have to explain to a child.
Then there are property taxes, and explaining how such taxes are used in the community. This can be broken down all the way to their school, roads and even the water coming out of your faucet for many communities. Other costs of repairs, dues and appliances might be better understood with real, hands-on experience. You’ll give them the fundamental knowledge about why rent costs are rising and how to determine what you should be paying.
It’s The Landlord — Hide!
Understanding rent from the tenant’s perspective is just as important. Your child understands that they will probably need to pay rent one day will help them think through future jobs, education, location and more. It will also help them understand that as a landlord, you are providing a service, and that can be quantified by time and money.
Letting your kids join you when cleaning out the gutters, mowing the lawn or even conducting an inspection can help teach them the amount of time and work that goes into managing a rental. It will also show them that having a rental means providing a service, and therefore the tenant is the customer.
Taking a trip to the hardware store and seeing the purchase of items that will be used for maintenance and repairs illustrates a physical manifestation of some of the costs. Installing those items helps with understanding the time and effort involved.
Owning a rental as a way to save for your child's education is great, and don’t forget that there can be just as much of an education found in the process.
This release was originally written & published By Forbes Real Estate Council
Joseph Edgar
Joseph is CEO of TenantCloud, a cloud-based property management solution that helps landlords maximize revenue from rental properties.
