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Now is the Time to Buy That Investment Home

Kristen Williams

Kristen is founder & leader of The Williams Team and has made us a top team in Keller Williams #1 worldwide office...

Kristen is founder & leader of The Williams Team and has made us a top team in Keller Williams #1 worldwide office...

Feb 8 3 minutes read

Real estate investing is a great way to build wealth - especially over the long term. And it's even better if you have future financial goal in mind.

Say you have a young child and choose to save for college. I can show you how to pay for college with very little work.

Step 1: Buy the Home

Let's say you can save enough for a 20% down payment on a $150K house. While that's no small amount of money, it's not like paying for college. You find a great house that will put money in your pocket each month from the rent after you pay the expenses (we call that cash flow!!). When you make the purchase, you'll have a loan for $120K.

Step 2: Have Tenants pay for the home

Now, you can have someone else pay the majority of your asset for you! If you can cash flow just $100 extra per month, you can use that money to decrease the amount of your loan. Paying additional money toward your loan will cause the loan amount to go down faster because the interest decreases. In our little scenario here, in just 15 years you'll owe only $55K. And, NO MORE $$ has come out of your pocket. Your tenants will have effectively put $65K in your pocket!

We have heard "I don't want to manage a house," or "I don't want to be bothered at 3AM for an emergency," or some other excuse not to invest in real estate. When you buy correctly, you can get enough cash flow to hire a property management company to manage all the things you choose not to.

So, for little time (that's the manager's job) and no more money (your tenants are paying for the home), you can sit back and cheer on your kid's soccer game & watch your asset appreciate.

Step 3: Sell the house

Fast forward 15 years and your kid is ready to go to college. Congrats, that's awesome!

Assuming that our market grows a measly 2% a year, this $150K home would be worth $200K. After you pay the fees to sell the home and the remaining loan balance, you'd now find yourself with over $130K to pay for college. That will go a long way - even at a college for "advanced" students!!

Put it all together

So, you're able to pay for college from just one home purchase, small monthly returns and small appreciation through the years. If you're reading this in Austin, you know that the chances that we'd have better market returns is pretty high - making the scenario even better!

Now compare to this taking that same down payment amount and put it in a traditional college fund. To walk away with $130K in the same timeframe, you'd need nearly 10% yearly market returns. That's a better than best case scenario in most years.

We love helping our clients achieve their dreams - both with their dream home and the homes to fund their dreams. Schedule a call to see how we can help you start your future today!

Find your investment home here

Search homes in the $150K range, just like the example in this post

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