Once I had my first child, I automatically started thinking about how I would pay for his college tuition! If you are like me, the idea of paying for your child’s higher education 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.
College Savings Fund Tactics:
College Savings Account
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!).
Rental Property for Each Child
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. We will rent the property and pay off the mortgage in 15 years. This will be just around the time our kids go to college.
After six months in Toledo, I am happy to report that we are under contract with two properties! 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. This gives us the option to pay less each month if we really needed it.
Benefits with the buy and hold strategy:
- Mortgage will be paid for by renters
- Give our kids responsibility of properties when they are older
- They will cut the lawn and prepare the property for new renters with paint and minor repairs
- Teach our kids financial responsibility – collecting rent and managing renters
- Appreciation of investment
- Give our children the flexibility to use the money for what they want
- College tuition, invest in their own business or continue managing the property for their own cash flow
Thomas and Evie already love helping us at the properties and I love that they will truly have ownership with these properties. I can’t wait to share with you the BIG discovery we made at the first property!