Tuesday, February 9, 2010

College Investing 101

College Level Investing

Most parents approach the college years with the age-old strategy of ripping their hair out and screaming as they hold garlic and crosses over the tuition bills. As if rising tuition costs were not enough to ensure premature aging due to despair, housing costs can often exceed other educational expenses. A very clever investing strategy that may result in profit from those college years is to buy your student a house in his name where he will be going to school. He can rent out the rooms and live there himself. That alone might pay for tuition, but if he resides there two of five years, the profits are not taxed when the house is sold.

Additionally, since your student needs to learn there is no free lunch, you can open a second mortgage and advance them the money to buy the home. It is thereby secure and due upon sale. You have the option to forgive the note if the property value doesn’t rise as hoped, but if it does, your wisdom will earn you a profit, and just possibly your student’s respect...which is priceless.

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