College costs just around the corner? Yikes! Yes, if you would have put aside $250/month for the last 13 years you’d have nearly $44,000 socked away (assuming average growth of 2%/year)…or almost $90,000 if you put away $500/month for the same period. But admit it. Not every parent has done that…for all their kids.

Now there’s another way to cut the cost of college…especially for parents whose savings are a bit short (or their offspring chose an out-of-state university): Invest in college real estate.

First, be sure your scholar has settled into their university for the long haul. (Know that 41% of entering first-time, full-time students at a four-year institution don’t complete a bachelor’s degree at that institution in six years, according to the National Center for Education Statistics). Let your children scope out their college town and be your eyes and ears. Some neighborhoods make better rentals than others (consider bus routes, parking and proximity to campus). Some college towns allow private rentals more than others.

Second, use your savings (or equity in your home) as a down payment for a college-student pad with extra bedrooms. Those extra bedrooms (ideally three to four) can be rented to other students to offset the mortgage payments if parents don’t buy all cash.

Third, use a top local agent to find a perfect property. We can refer you to a quality agent in the college town you want through our affiliate networks.

Fourth, hold your investment for the long term. If you sell to break even when your child leaves school, you could save thousands in dorm fees and housing expenses. Picture this “hold” scenario: Invest $23,500 in a $100,000 college rental. Then, assuming 3% appreciation and rent of $1,000/month to pay expenses, your equity position could be about $83,000 after 13 years. Of course, real world results will vary. No question managing student rentals requires parent/investors to expect needed repairs, and the capital risk with rental properties is higher than with regular savings.

The key is—even though your savings are not what you hoped—you can still cut the cost of college with some savvy investing. To maximize your chances of good results, read Smart Essentials For College Rentals by Dan Gooder Richard (available on Amazon.com) to get the inside skinny on exactly how you can beat college costs…even if you haven’t saved enough in the meantime. Then contact us for a referral to a top real estate professional in the college town your scholar has chosen.