Money Advice and Banking Tips

Christopher Penn, Financial Aid Podcast says on July 19th, 2006 at 7:53 pm

Using rental properties as a college investment fund is:

1. Insane.
2. STUPID.

Counting on the appreciation of a volatile asset is, not to be too blunt, the worst possible idea. Now, if you own rental properties for the passive income generated from the rentals, THAT is smart, and a good idea. Passive income generation remains as long as you can keep the units filled, and even after the kids are in and out of college, you will likely still have that revenue stream.

But property appreciation alone? Not on your life. He doesn’t say how old his kids are, but there is the very real risk that he bought at or near peak in his market and by the time the kids are ready for college, his market might be in a pretty significant lull.

Dumb little man indeed.

Chris
–
Christopher S. Penn
Daily financial aid internet radio on demand, no iPod required
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Anne Kootstra says on July 20th, 2006 at 5:01 am

Insight in your financial situation is key. Most of these systems will teach you a method that promisses this. However, it’s like using the “tasks list” in outlook or your PDA, it requires dicipline to look at the device reguarly no matter which method is used. This is no different with one’s personal finance. Pick a fixed moment every week/bi-week/month to go over it but go over it reguarly!

Look ahead and plan your expenses. Then afterwards look to see where there are difference between the planned expenses and the actual expenses. This difference is the most important thing to look for.

Planning your expenses also involves some other things like goals, sizing the amount required etc. This is something that can be particularly tricky and it a different matter.

Regards,

Anne Kootstra

Jay @ Dumb Little Man says on July 20th, 2006 at 9:01 am

Thought I would chime in on the conversation.

@ Chris – Good point and I agree. My wording does make it sound as if the appreciation is the only contributing factor. However, the monthly income generated is also put towards their college fund. So in total roughly $450 per month in rental income goes into their college fund. That still leaves me with some cushion for repairs and other expense

Regading the time of purchase – its been a few years and on average the units are up about 30%. I understand that this is not “for sure” money until I sell and collect, but I am not planning on selling anytime soon.

Thanks

Curmy says on July 20th, 2006 at 8:46 pm

I like to use a few different accounts to keep myself organized.

Curmy says on July 20th, 2006 at 8:47 pm

@ Chris

It is so lame that you put all those links in your comment.Lame, ultra lame!

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———
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