If you are like me, the idea of paying for college in 10-15 years is a little overwhelming. Kids are expensive RIGHT NOW, so thinking about their price tags in 15 years is enough to give most parents heart palpitations. It’s not getting any cheaper to attend a university and Chris and I want to help out our kids as much as we can once the time comes.
One tactic we are currently using is a bank account for each child that we pay into monthly. Last month we looked at the balance and I was pretty pleased with our progress until I realized that it would probably only pay for one semester of books in the year 2031 (yikes!).
That is why Chris and I made the decision when we moved back to Toledo to purchase a rental property for each of our children. The plan would be to rent the property and pay off the mortgage in 15 years, just around the time our kids would be entering college.
After six months in Toledo, I am happy to report that we are under contract with two properties that we plan on gifting to our children once they graduate from high school! We are purchasing each property for less than $100K and will be putting it on a 30 year mortgage with the goal of paying it off in 15 years. Originally we were going to do 15 year mortgages, but a wise friend advised us to consider the 30 year mortgage so that we had an option to pay less each month if we really needed it.
Here are a few reasons why Chris and I were so drawn to this plan:
Although there is a larger investment up front, the majority of the mortgage will be paid for by our renters and may even leave us with a small profit each month
We loved the idea of teaching our children responsibility through each of their properties - when they get older they will be responsible for cutting the lawn and preparing the property for new renters with paint and minor repairs (with our guidance of course)
Along with teaching hard work, we will also be teaching them financial responsibility with collecting rent and managing renters
Each property is in a good location so in an ideal scenario, each property would appreciate and be worth more than what it was worth when we made the initial investment
Giving our children the flexibility to use the money for college, to invest in their own business or continue managing the property for their own cash flow each month is really appealing
Thomas and Evie already love helping us at the properties and I love that they will truly have ownership with the homes that they are working on. Once these deals are complete I will take you through each property and provide details on the plans for each house. I can’t wait to share with you the BIG discovery we made at the first property!