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Graduate from college with an investment
Why not approach your parents him with an investment idea. For a small down payment, you can buy a property together and become investment partners. They put in cash and you take care of the property for an ownership split. You live in the property while going to college free in exchange for shoveling the sidewalk, renting out the other suites, collecting rent, and taking care of other maintenance surprises. While your investment is time and sweat, your parent’s investment is cash and the ability to qualify for a mortgage.
At graduation, you either sell the property and split the profit or keep it. You graduate with a tidy profit or equity in the property which you can invest in your own place, set-up your business or simply take the year off for your hard work. You probably will learn more about business from this venture than four years of business school.
So, how to get started?
Step 1: Evaluate your parents.
Do your parents have some extra cash and do they have a favorable financial background? Do you have a good relationship with your parents? How do you think they will react to the idea? Are you comfortable being in business with your parents?
Step 2: Do a budget.
Get a sense of what it would cost to buy a multi-unit house close to your college. The best place to look for properties is What are the current rents? Find out the property taxes and typical utility costs to run a property. Will the property at least break even?
Step 3: Create a proposal to be presented to your parents.
How much money will be required for the down payment? What is the annual income and expenses? Assuming a 5% property increase per year, what will the value of the property be at the end of four years? What will your return be as well as your parents return.
Step 4: Draw up a co-ownership agreement.
This will detail what is expected of both you and your parents, contingencies should things go different than planned, a target date for sale of the property, dispute mechanism should you not be able to agree.
Step 5: Look for a property.
Always remember, you want a property that will be easy to rent. Ensure you buy close to the college and close to transit. Also, remember to keep in mind resale. You want to easily be able to sell the property in the future. So, think of what would buyers want in a property.
Get the Parent/Student co-buying guide.
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