One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.
Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you would have $44,497.41 to pay for their college education. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.
Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.
An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.
Obviously, this is just an example of why rental homes are an IDEAL investment... They can provide Income, Depreciation, Equity build-up, Appreciation, and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.
If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.
Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you would have $44,497.41 to pay for their college education. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.
Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.
An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.
Obviously, this is just an example of why rental homes are an IDEAL investment... They can provide Income, Depreciation, Equity build-up, Appreciation, and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.
If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.
RSS Feed
