Should College Students Invest In Real Estate?
Setting money aside to invest as a student can be a tedious task. After all, most students go into significant debt during the course of their studies, so making some money to begin with is a sure first step that will make you financially able to make some investments. Although you can invest in pretty much anything, today, we will be covering the prospects of investing in real estate as a college student.
Why Invest in Real Estate?
Investing in real estate is the crown investment of many, so why would you want to invest in real estate during your studies? It costs a lot, it demands additional costs, such as repairs and maintenance every year and is a relatively volatile market. Grab your cup of coffee and read on to see the benefits of investing in real estate:
- Real estate provides you with income and increases your money flow,
- Real estate is volatile, but much less than the services sector, for example,
- Real estate is a firm investment, and you have something to show for your investment,
- Real estate for students (student housing) shows a tendency to grow during recession times,
- Real estate increases its value with inflation, unlike other goods.
How to Invest in Real Estate?
Now that we know why, let’s see how to invest in real estate as a college student. Although real estate in general demands money that is not accessible to an average college student, there are other ways to invest with less risk and less time spent saving up the money for the large purchase. There are three ways that you can use to invest in real estate as a college student:
- Take out a mortgage for real estate purchase,
- Use seller financing, and
- Use a real estate investment fund (REIT).
Free Up Some Time First
However, the first thing you should do to ensure your studies do not suffer is to free up some time. You can buy academic essays online and use these to study instead of making your own study notes. A service like this can also help you with your homework assignments, term papers and similar. Once you have freed up some time, you can move on to investing.
Take out a Mortgage for a Rental Unit
Taking out a mortgage as a student may seem far-fetched, but some states will allow you to purchase your own piece of real estate with as little as 3% down payment. For an average $200,000 home, this boils down to around $6,000 to start with. Rent out most of the place and have the tenants pay off your property. This is especially suited for those who plan to stay in the city or town after their studies.
Use Seller Financing
Seller financing is a specially lucrative approach to real estate investments. Under seller financing you take over the property, all maintenance and repairs, as well as legal dealings and in exchange send the profits (or a part of those) to the owner. Once the property has been paid off, you get to enjoy your new piece of property and all the revenue it generates.
Use a Real Estate Investment Fund (REIT)
Using a Real Estate Investment Fund is the cheapest of all options, and it carries the least risk. With REIT investments, you can invest very little (usually $500, or $1,000 and become the owner of a portion of a real estate. In exchange, you get dividend payments and capital gains. This is the best option for those who have very limited resources.
Final Remarks
Many say that time in the market is better than timing the market. For this reason, make sure that you start investing while young and ensure a good growth of your capital investment. Investing in real estate is hardly seen as something that students should do, but it is not impossible. With a good approach and knowledge of the market, you too can retire soon after graduation.
Barbara Fielder
Barbara Fielder is a bilingual who loves traveling with her family. She enjoys reading in the two languages as well and uses every chance she gets to perfect her skills. She would love to work as a translator and an interpreter and hopes that her career path takes this direction.
