Have a kid, buy a condo

A particular book we like to recommend is called “Crash Boom” and it hits home on a simple concept that most likely resonates with most of us on some level. (Crash Boom!: Make a Fortune In Today’s Volatile Real Estate Market, By Greg Rand)

In that book they detail a strategy that arose after he had his second child. Suddenly, he started considering things that he had not thought of before such as diapers, the cost of nursery school, the cost of college! After he took a quick look on the web to see projections for what college would cost if you were to have a kid today, it almost made him sick.  He now had two to ponder! The search results stated that it would cost more than $250,000 to educate one child and that’s not including post-graduate degrees. Unless your kiddos become mega-athletes or you personally strike it rich on the power-ball you are going to have to come up with a pile of cash in the next few years or pass the debt burden on to your children.

I know that you are different and you have a plan in place that you are going to save $500 every month for your kids education, put it into a compounding account and it won’t be a problem.  But as we all know life happens, the car needs an unanticipated repair, you spent too much at Christmas, your child needs braces, you get diagnosed with a rare sickness that racks up your medical bills and the list goes on and on. Before you know it you missed a month here and missed a month there, don’t worry it happens to everyone.

Greg has a great idea to take the pain out of saving every month and put your children’s education fund into cruise-control.  Hence have a kid buy a condo, town-home, duplex whatever you want that will proactively have you sitting-pretty financially 18 years down the road.  Lets do some quick math, I know don’t worry I will do it for you and you just have to read along.

Knowing that DesMarais/Lohn Investment Properties would not present a deal to you unless it cash flowed $300 a month.  See calculations below. Contact us to learn about our BRRR method of (buy/renovate/rent & re-fi) where you can have no or very little out of pocket money into the deal, but for simplicity we will use a traditional investment example in this illustration. Lets imagine that lil Jimmy was just born and rather than saving every month you bought an investment property for $150,000. Of course we are going to leverage your cash and put 20% down ($30,000) and lets say that you get very modest appreciation rate of 3% over the next 18 years (MN historical average is 3%).  Taking into account the minimum cash flow ($300 a month) and sales proceeds you would be looking at $196,623.28 and that is just taking the cash flow alone and stuffing it in your mattress.  If you were to take that cash flow and put it in a modest account bearing you 2% in compounding interest that is an additional $78,525.19 over that same 18 years.  Total those both up and you are in control of $275,148.47. Now saving for your kids education doesn’t sound that bad, does it?!.  Best part of it is this is PASSIVE INCOME that is backed by a collateralized hard asset, oh and we didn’t even get into the tax advantages.  Let DesMaris/Lohn Investment Properties help you grow your children’s college funds.

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