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Top 5 Financial Planning Tips for Recent Graduates

Top 5 Financial Planning Tips for Recent Graduates

If your child has just graduated from college or the date is approaching, you (and they) are likely excited and nervous about what comes after. As I’ve advised hundreds of families on preparing for college, I can also give you a few tips for after they get their AA or BA — tip number one is to take a deep breath. 

Both of you can absolutely do this.

Here are some college graduate finance tips to deal with debt, uncertainty, and the world of personal finance. The sooner they start planning their finances, the sooner they’ll be planning trips, new car specs, and, hopefully, decor for their own home.

1. Invest in Financial Education

You know dealing with your finances takes a lot of skill, and you want to help your kid deal with the anxieties of starting out. Here are some financial education resources to take advantage of:

  • Books: Start with Suze Orman’s classic, The Money Book for the Young, Fabulous and Broke or Cary Sieagal’s Why Didn’t They Teach Me This in School?: 99 Personal Money Management Principles to Live By. 
  • Online courses: Direct them towards online courses on personal finance through platforms like Coursera or Khan Academy
  • Finance blogs and podcasts: Point them to reputable financial blogs and listen to podcasts that focus on budgeting, saving, investing, and other financial topics.
  • Workshops and seminars: If you find a link to financial literacy workshops and seminars offered by community organizations, schools, or local banks, share it with your kid. (If you think they’re interested, of course.)

2. Educate Them on Managing Student Loan Debt 

CollegeMoneyTips has all the resources for handling student loan debts for parents and graduates, so check out articles on home equity loans and other financial tools such as refinances.

The rest is up to your child. Make sure they understand the terms of their loans, including interest rates, repayment plans, and grace periods. Here are some basic tips:

  • Consider consolidating or refinancing loans for a lower interest rate.
  • Make extra payments when possible to reduce the principal balance faster.
  • Check out income-driven repayment plans with Federal Student Aid.

3. Build Good Credit

If your child has student loans, there is one more reason to pay them on time: building good credit. A good credit score can help them secure a loan, rent an apartment, or get a job. According to Experian, the average American has a score of 715, but anything over 670 is considered good. For starters, they can even have a fair credit score. 

Besides paying student loans on time, teach them about other ways to build a solid credit score:

  • Getting a secured credit card, using it for small purchases, and paying off the balance in full each month (you can help them with this).
  • Paying utilities and other bills on time (and using automated payments in their banking app to do this)
  • Encouraging them to monitor their credit report, check for errors, and make sure their credit history is accurate.

4. Build an Emergency Fund

I understand the economy isn’t really helping young adults leave money aside each month, but that does not mean they should give up on saving altogether. If your child doesn’t use change rounding apps or automated transfers to save, there’s a simple starting point.

With time, they should be able to save for at least three months of living expenses, which is considered a minimum emergency fund. It’s a lifesaver in case of unexpected medical expenses, repairs or additional certification opportunities. 

5. Prepare the Ground for Future Homeownership

I know, they’ve just started and may be in debt, so even broaching the topic of homeownership with them may feel like you’re getting ahead of yourself. Still, preparing for it ahead of time isn’t such a bad idea. Stats show the youngest generations have particularly poor financial literacy skills, so try to motivate your child with a clear goal. 

Here is what you can talk to them about:

  • Student loans: Student loans impact people’s borrowing power significantly, but they do not stop them from purchasing a home. They do affect eligibility, though: debt impacts everyone’s debt-to-income ratio, which is a key requirement. While the ideal DTI is 36%, some lenders allow DTIs of up to 50%. 
  • Researching mortgages: With low-to-moderate income, they can go with government loans such as FHA loans. If they’ve been in the military, VA loans can help them get a home without a down payment. For homes that are a bit more expensive or young adults who have been gifted down payments, a conventional mortgage (that is, a regular loan not insured by the government) may be a better choice as it may have lower interest rates.
  • Co-signers: If your child has a steady job and a regular income, and they’re set on buying a home sooner, you or another family member can help them qualify by being their co-signer.
  • Assistance programs: As a first-time homebuyer, they have the right to plenty of federal- and state-funded down payment assistance programs.

Finally, if you want to get them a highly useful gift, you can always schedule a talk with a certified financial advisor — they will help them reach their goals, whether it’s paying off student loans, buying a home, building savings or even investing (time is the magic ingredient that makes investments grow!).

And last but not least, congratulations to you and your child for making it through college.

Construction Careers: 5 Steps to Building a Career in Construction

Construction Careers: 5 Steps to Building a Career in Construction

Construction careers can be a viable option for new graduates. Whether you’re looking into a residential or commercial market, the population continues to expand, and new businesses continue to open, giving this type of career the potential for a secure future. Knowing the ins and outs of construction businesses can also be beneficial for a variety of related careers or help you to start your own business. 

1. Consider the Different Trades and Choose Your Interest

Within the construction industry, there are many different trade opportunities. Specialized skills are in demand and essential for helping all the different elements of residential or commercial buildings come together. Trades to consider under the construction umbrella include drywall, electrician, insulation, roofing, carpenter, heavy equipment operator, plumber, HVAC tech, mason, glazier, painter and many others. If you’re just starting out, you may initially find work as a general construction laborer or as a laborer in a specific trade area. 

General programs at community colleges or tech colleges may have programs related to a specific industry or trade. Trade-based programs like construction could help recent grads to build financial stability. 

2. Obtain an Apprenticeship to Hone Your Skills

You may already have certain talents or skills that will help you be successful in a specific construction trade area. However, gaining an apprenticeship is where you’ll really dive into the specifics of a trade and learn all the ins and outs. There are different standards for various trades, and work is inspected in order to ensure it meets codes and requirements. Specific businesses may also have different processes and methods for the way they approach their trade. Some may specialize in doing things a certain way or having a specific quality control process, for example. You may work with a hiring agency, individual businesses, or local trade schools to find an apprenticeship. 

3. Continue to Grow Your Skills at a Reliable Company 

Once you’ve apprenticed, you’ll have a solid set of skills under your belt. You may find regular work with the same company you apprenticed with or make connections among other trades and quickly find a steady job that helps set you up for financial success. Finding a solid company can be important in order to have an employer that values your skills. Since construction trades can sometimes have busier and slower seasons, it’s also important to know what to expect in terms of pay. Know whether you’ll be paid hourly, per job, or with a salary. Hourly and per-job rates can fluctuate depending on how busy the season is, but overtime may be available in busy times which can help strengthen your income. As you grow your skills, you may also be able to get work with additional responsibilities or move up in the company. 

4. Take Additional Courses or Learn About Intersections of Tech and Construction Trades

As you gain your knowledge and skills, take additional specialized coursework or learn how tech can be used in more traditional construction trades and how it can provide more value and opportunities. If you’re interested in sustainable building practices, a career involving solar photovoltaic panels might be a good option. If you have strong organizational skills as well as good construction knowledge, working as a construction project manager may be in the cards. There are also college degrees, such as engineering or construction management, that are related to the construction industry and could be worth considering. 

5. Consider Starting Your Own Construction Business

While working for a good construction company and doing specialized trade work can provide excellent opportunities and financial stability, for some, the option of starting their own business becomes the ultimate goal. A construction business will take knowledge, networking, and skill, but can offer a massive number of benefits and new challenges. Contractor’s licenses are typically necessary to operate your own construction business, and there are varying categories depending on the type of construction you’ll be doing. Know that there are differences when it comes to licensure in different states. North Carolina contractor license requirements, for example, require people to be at least 18 years of age, complete the exam for the specific licensure type, and meet the minimum financial requirement based on the limitation of the license. In SC, people must pass the appropriate exams and have at least two years of work experience for the requested certification. Learning the requirements for your area can help you know what to expect. 

Construction Careers Can Help You Have a Successful Future

For recent graduates who are interested in building, renovating, or trades, a career in construction could be a smart solution. Growing in skills and learning the ins and outs of specific trades can help you get the financial stability you need and grow a career you love. 

For college juniors, checking into how a trade like construction could help build financial stability as well. 

Navigating the Path to Homeownership: A Guide for Recent Graduates

Navigating the Path to Homeownership: A Guide for Recent Graduates

Graduating from college is an exciting stage of life. You have a new adventure ahead as you consider your professional aspirations and what the rest of your life may look like. Maybe you have some serious plans with a significant other as well. 

As you consider how the rest of your life will play out, one thing to consider is where you will live. Whether you are open to any city with a job or have a specific state you have fallen in love with, you will need a place to call home. For many recent graduates, the dream of owning a home may become a reality in the near future. 

However, getting ready to own a home is not as simple as it sounds. Homeownership comes with a lot of responsibility, and when you are younger, this might be more responsibility than you want. That does not mean it is too early to start planning for the future. Here are some tips to consider if you want to go for buying a house as a new grad one day. 

Start Building Credit

Welcome to the age of credit scores. As an adult, you will find that your credit score has a significant impact on your life. A credit score is used to assess how reliable you are as a borrower, specifically in terms of paying back debts. Debts that affect your credit score include student loans, car loans, credit cards, and home loans. The higher your credit score, the easier it will be to qualify for financing options when you enter the market for a house. The sooner you start building your credit, the better. Make sure you keep up with all debt payments. Always pay the full amount owed rather than just the minimum. Keep your credit balance utilization rates low, and consider becoming an authorized user on a credit card owned by someone who is financially responsible, like a parent. These steps will help you build a strong credit history and demonstrate your financial responsibility to potential lenders. 

Find Strong Economies

Choosing the right place to buy a home is key to successful homeownership. As a recent graduate, you are probably on the hunt for a solid career if you don’t have a position lined up already. While homeownership could be a few years off, it is never too early to consider how local economies affect the housing market. For example, should you look for jobs in the tech sector in Charlotte, North Carolina, since the growing economy is great for young professionals? Is it better to shoot for a state with a low cost of living but strong economic metrics, like Texas or Michigan? Are FHA loans in Idaho easier to buy a house with because of an ideal job market? When you think about eventually buying a home, look for areas with positive economic outlooks.

Save for a Down Payment

One of the biggest obstacles to homeownership is the down payment. When you buy a house, most lenders will require a certain percentage of the home’s price to be paid upfront. For a conventional mortgage, the recommended amount is 20%. While other financing options will allow much smaller percentages, there are also closing costs to consider. If you have not already started saving money in college, building up a significant down payment can take a while. Start budgeting for the upfront costs of homeownership early so you can make smart financial decisions today. 

Take on More Responsibility

Owning a home sounds like a dream to many college graduates. The space is yours to do what you want, and there is more privacy from neighbors, which you may have seriously lacked in college. However, homeownership comes with a lot more responsibility. There is no landlord or RA to help handle maintenance issues. If repairs or upgrades are needed, those burdens fall on your shoulders. Some homebuyers may not be ready to take on all the tasks associated with caring for a home. You may not even have the time to do all these chores, what with a new career beginning or taking online courses to save money for the future. Make sure you are prepared for the hard work required to care for a house before you think about buying one. 

Is a Home Part of Your Dream?

Not every recent college graduate is interested in buying a home. Often, young professionals crave the flexibility of renting or having roommates to save money and keep their career options open. However, someday, you may desire the investment opportunity and privacy of your own home. Planning for that eventuality now is the best way to prepare for it. Think about how you can build your credit score, save for a down payment, and put yourself in the best position to become a successful homeowner in the future. 

How to Prepare for and Save Money on College Student Health Care

How to Prepare for and Save Money on College Student Health Care

A college education is essential to career development and lifelong learning, but there’s no denying that it can be a costly investment, especially with tuition, fees and accommodation becoming increasingly expensive every year. 

Our previous post guides parents through ways to reduce college costs, such as taking advantage of dual-enrollment programs to give kids a headstart in transitioning to college while also saving money on tuition for a few courses or even an entire semester.

However, beyond tuition and boarding costs, one of the essential college expenses to prepare for is health care. How do you. handle college student health care?

Financial services company Bankrate estimates that medical care costs can reach up to $2,500 per year, with the costs being higher if your child needs prescription medication or medical services not covered by the campus health centers. Since health and wellness significantly influence academic performance, below are ways to prepare for and meet your kids’ health care needs in college while still saving money for other essential expenses like technology and emergency funds.

Your Options for Health Care Coverage

What exactly are your options for health care coverage?

  1. Parent health insurance: Your child can remain on your health insurance plans until they turn 26, thanks to the Affordable Care Act. This option provides coverage for a wide range of medical services and is often convenient for students.
  2. University health plans: Many universities and colleges offer their own health insurance plans specifically designed for students. These plans typically cover services provided at the university health center and may include options for both on-campus and off-campus care.
  3. Government programs: Undergraduate students with low incomes may qualify for government-sponsored health insurance programs like Medicaid. Eligibility requirements vary by state, so check with your state’s Medicaid office to see if your child will qualify.
  4. Private health insurance: You can also purchase private health insurance plans if your child doesn’t qualify for coverage under parent insurance or through their university. Private plans offer flexibility in choosing providers and coverage options but may be more expensive.
  5. Health insurance marketplaces (ACA): Through the Affordable Care Act (ACA) marketplace, undergraduate students can explore and purchase subsidized health insurance plans based on their income level. You may want to look into this if your child doesn’t have access to other coverage options.
  6. Student health centers: Most campuses have on-campus health centers that provide basic medical services to students at low or no cost. While these centers may not replace comprehensive insurance coverage, they offer convenient access to care for minor illnesses and injuries.
  7. COBRA coverage: Undergraduate students who recently lost coverage under a parent’s health insurance plan may be eligible for COBRA continuation coverage, which allows them to continue the same coverage for a limited time period. However, COBRA can be expensive as the individual is responsible for the entire premium.

Get an idea of all your options and compare costs and coverages so you know which works best for your child. Understand enrollment deadlines and other factors so you don’t lose out on any one type of coverage, including university coverage.

Review Your Child’s Current Health Insurance Coverage

Young adults stay under their parents’ insurance plans until age 26, but it may not be the most ideal if your child moves to college out of state and can’t stay covered by the plan’s network of care providers. 

Ensure you understand the details of their coverage so you can compare it with campus health plans, which can cost an annual average of $2,924 for public universities and $3,874 for private schools. 

These school-sponsored plans can be more affordable than getting health insurance through the marketplace and help you save money by lumping the price of on-campus care with tuition and fees. 

Consider Additional Coverage

If you choose to stick to your child’s current plan, then at least consider additional coverage, such as vision insurance, which costs an average of $95. Considering college students are at risk of eye conditions like computer vision syndrome and myopia due to increased screen time and online learning, vision insurance can help reduce out-of-pocket expenses for routine eye exams and corrective eyewear. Fortunately, many optical retailers, including the budget-friendly Eyebuydirect, accept vision insurance even when you order glasses online for new or updated prescriptions. While the platform already provides stylish and affordable frames starting at $6, the cost savings from insurance can help your child afford additional protective features like blue light filters while still staying on budget.

Look into Online Health Services

Health-related expenses can also rack up easily if your kids attend school outside of your home state, whether it’s due to kids traveling for routine care or their insurance coverage being geographically limited. Fortunately, online health services are a viable option for saving time and money while still getting them the quality care that they deserve.

In the same vein, considering money transfer apps can significantly streamline students’ financial management, essential for managing tight budgets and ensuring timely payments for various services, including health care.

Given that more than 60% of college students meet the diagnostic criteria for at least one mental health problem, virtual health providers like TimelyCare can make mental health services more accessible to college students. The platform partners with over 300 institutions worldwide and provides up to nine free scheduled sessions of counseling and therapy every year.

In addition to these money-saving tips, instill healthy habits and choices into your kids’ daily lifestyles, such as eating well and sleeping on time. Continue to check in as they settle into college life, and you’ll find that the transition will be smooth and stress-free. Continue reading College Money Tips for more helpful resources.

How to Start a Dog Walking Business to Pay for College

How to Start a Dog Walking Business to Pay for College

Parents, have you ever considered how you’ll pay for college? What’s a great way to get in shape and grow a side hustle? Why not consider a dog walking business?

Starting a dog walking business isn’t just about earning an income. You can tap into so many other benefits — schedule flexibility, offering practical solutions for dog owners and a pathway to take care of a portion of your child’s college education. Plus, who can resist those puppy licks and love?

Here’s how to start a dog walking business to pay for college, and if you want to start small, how to start a dog walking business in your neighborhood. 

Key Takeaway

There are approximately 29,000 dog walking enterprises in the U.S. Starting a dog walking business can be a lucrative way to pay for your child’s college education. Arm yourself with a love for canines, some treats, dog training knowledge, credentials to start a successful business.

Why Start a Dog Walking Business to Pay for College?

Starting a dog walking business to pay for college has so many benefits, including the opportunity for supplemental income, flexibility, low overhead costs and long-term financial planning:

  • Supplemental income: The most obvious benefit of starting a dog walking business is that it offers a reliable source of income to contribute toward your child’s college fund. It can help alleviate the burden of college tuition and expenses.
  • Flexibility: Luckily, you don’t have to commit to a nine-to-five job with a dog walking job. You can walk dogs whenever it works for you! (Well, obviously within the confines of your clients’ schedules — the people, not the dogs.) Ultimately, you can balance your responsibilities as a dog walker with your existing commitments.
  • Can work on the business with your child: Why not take your child along? Your college-bound child can learn more about building their own business in college. This comes with dozens of lessons, including entrepreneurship, financial management, customer service and the value of hard work. Plus, you can get in some quality bonding time. Who doesn’t love connecting with their high schooler and at the same time, teaching them about responsibility and work ethic? Your child can even learn how to start a dog walking business as a teenager.
  • Low overhead costs: Luckily, you don’t need much in the way of capital to start a dog walking business. You likely don’t even need to purchase leashes, because the dog owners will likely have those for you. You may just need basic supplies like waste bags and great tennis shoes for walking. There’s no need for a physical storefront or expensive equipment.
  • Long-term financial planning: Starting a dog walking business now means you’ll fund your child’s college education and set a foundation for long-term financial stability. You can keep growing your business even after your child graduates from college!

The amount of money you can earn is limitless, so consider setting a goal and going to town (literally!) with a dog in tow!

How to Start a Dog Walking Business to Pay for College

So, how do you get a dog walking business going? Is it as simple as grabbing a couple of leashes and hitting the pavement? Let’s take a look at some steps you can take.

Step 1: Understand the market.

Before diving in, it’s essential to understand the dog walking market in your area. Research the demand for dog walking services, what competitors are charging and any additional services they offer. Remember, your service isn’t just about walking dogs; it’s about offering peace of mind to pet owners who are unable to provide their pets with daily exercise due to work or other commitments.

Step 2: Craft a flexible business plan and build credentials.

A clear plan serves as the foundation of your dog walking business. Consider the following:

  • Services offered: Besides walking, you might offer pet sitting, feeding or even basic grooming.
  • Pricing structure: Determine how you’ll charge (per walk, per day, per week) and whether you’ll offer packages or subscriptions.
  • Branding: Create a memorable name and logo that resonate with your target market.

Clients may also want you to demonstrate your credentials, such as your ability to do pet first aid/CPR, which you can get through the American Red Cross or Pet Professional Guild; basic dog training knowledge, insurance, bonding and membership in professional organizations. 

In addition, do your best to build client testimonials that can help establish trust and bring new customers to your business.

Step 3: Streamline operations with technology.

Leverage technology to manage your schedule, client communications, and payments. Platforms like ThriveNeighbor can be particularly useful, offering tools designed to streamline the administrative side of your business. This allows you to focus more on your studies and less on paperwork, all while providing a professional service to your clients.

Step 4: Market your services.

Utilize resources, social media and word of mouth to promote your dog walking business. Tailor your marketing efforts to highlight the benefits for busy college students, professionals and local residents. Emphasize the flexibility of your services, the health benefits for their pets and the peace of mind your reliability offers. Create flyers and business cards to leave in local pet stores or vet offices. Remember, your marketing should highlight the benefits of your services. 

Step 5: Deliver exceptional service.

Excelling in the dog walking business requires more than just showing up. Build strong relationships with your clients (both human and canine) by being reliable, professional and genuinely caring. Incorporate personal touches, such as sending updates during walks or remembering individual preferences to set your service apart.

Step 6: Manage your finances wisely.

Keep meticulous records of your income and expenses. Use financial management tools or software to track your earnings and budget effectively. Your goal is to make money while minimizing debt, so financial prudence is key. Consider setting aside a portion of your earnings for business growth or unexpected expenses.

Step 7: Balance business with everyday life.

The flexibility of a dog walking business is its greatest advantage. Schedule walks around your regular nine-to-five job and other commitments, ensuring you’re never compromising the rest of your schedule. Use the business as an opportunity to enhance your time management skills, balancing client commitments with academic deadlines and opportunities for rest and relaxation.

Step 8: Embrace the benefits beyond income.

Apart from the financial rewards, your dog walking business offers numerous benefits. It’s a chance to engage with your community, build a network, and develop entrepreneurial skills. Furthermore, the physical activity and time spent with pets can be a great stress reliever, offering a welcome break from the pressures of everyday life.

Step 9: Leverage online resources.

Tap into online resources to grow your business, such as running continual Facebook ads or promoting your business to a list. These resources can provide valuable insights, tools and networking opportunities to help grow your business and reach more customers.

Step 10: Seek feedback and adjust.

Ask for feedback regularly and be open to making adjustments. Whether it’s changing your routes, offering additional services or adjusting your pricing, being responsive to your clients’ needs will help your business thrive.

How Much Can You Make with a Dog Walking Business?

The cost of dog walking services can vary depending on various factors:

  • Location
  • Walk duration
  • Number of dogs
  • Additional services offered
  • Reputation of the dog walking business

The average hourly pay in California is $16.99 an hour, according to ZipRecruiter. Pay ranges between $14.23 to $19.47 in California, though you might make more, such as up to $25 or $35 per hour.

Some dog walkers may offer discounts for regular or multiple walks per week, while others may charge extra for additional services such as feeding, administering medication or longer walks.

Dog walking rates may be higher in urban areas with higher living costs compared to rural areas. Research local dog walking businesses and compare prices to find one that fits your budget and meets your needs.

How much can you make with a dog walking business? The average is $16.99 an hour.

How Effectively Can a Dog Walking Business Help Pay for College?

So, can it really help pay for college? It entirely depends on the number of clients you have and what you charge. For example, let’s say you walk three dogs for an hour each day, and you charge $25 per dog. 

3 x $35 = $75 per day 

If you walk them for seven days (three dogs, each day of the week), that’s $525, and if you do that for four weeks, you earn $2,100 per month. (That might be on the higher end of what you might be able to charge, depending on your area.) 

Throw in some extras, like grooming or giving pets medication, and you could earn even more! This one small business could easily help pay for your child’s college tuition, but again, it depends on the number of consistent clients you have and the amount they’re willing to pay.

Consider a Dog Walking Business to Pay for Your Child’s College Education

If you love dogs, this type of business may make a lot of sense for you! If you like animals in general, you could consider expanding your business — though it’s not likely that you’ll get a lot of traction from a cat-walking business! However, there is a great need for pet sitting when families go away on vacation or on holidays. 

Ultimately, consider how you might want to create a side hustle that revolves around pets and helps you craft a lifestyle that helps pay for college and gives your child countless opportunities.

FAQs

Is it hard to start a dog walking business?

Anyone can start a dog walking business because no formal qualifications are needed, though you do need to know a bit about handling dogs and dog training. You may also need to know some formal skills, such as pet CPR. Also, you may need a firm understanding of how to market your business to your area.

How do I start being a dog walker?

Start advertising your services everywhere — in coffee shops, in restaurants, in other businesses. Start running Facebook ads to dog owners in your area to make them aware of your services, and get one or two clients to give you a positive testimonial. Consider setting up a Facebook page and website to advertise your services as well.

Where do dog walkers make the most money?

As you might expect, dog walkers make the most money in large cities, so if you live in a large metropolitan area, you’ll have a lot of benefits in the form of potential clientele. Dog walkers make the most money in cities like Los Angeles, Chicago, Washington, D.C. and New York.

Best College Towns for Rental Properties: The List May Surprise You

Best College Towns for Rental Properties: The List May Surprise You

With college tuition soaring, families and students nationwide face the daunting challenge of funding higher education. Traditional savings plans, scholarships and financial aid often fall short of covering the total cost of college, leading many to seek alternative solutions. 

Enter the innovative strategy of starting a rental property business — a venture that promises financial returns and teaches valuable lessons in entrepreneurship and management. 

This approach addresses the immediate financial needs for education and sets the foundation for long-term financial independence. By investing in real estate, students and their families can create a stream of income that helps bridge the gap between scholarships and savings, making the dream of a college education a more achievable reality. 

So, what are the best college towns for rental properties? Let’s take a look.

Key Takeaway

Approximately 10.6 million American tax filers declared rental income — among 17.7 million properties, about 7.1% of 1040 filers are possible landlords. 

The best college towns for rental properties: Athens, Boulder, College Station, Madison, Gainesville, Ithaca, Chapel Hill, and Ann Arbor.

The Best College Towns for Rental Properties

You want just the right combination of steady demand, robust rental market in a neighborhood close to campus. Here’s a quick view of the best college towns for rental properties and the top colleges for real estate:

  • Athens, Georgia (University of Georgia): Athens is known for its vibrant music scene and thriving college community. The University of Georgia attracts a large student population, creating steady demand for rental properties.
  • Boulder, Colorado (University of Colorado Boulder): Boulder offers a picturesque setting with access to outdoor activities and a progressive culture. The University of Colorado Boulder contributes to a robust rental market driven by students and young professionals.
  • College Station, Texas (Texas A&M University): College Station benefits from a stable economy and a growing population due to Texas A&M University. The college town’s relatively affordable housing market and strong rental demand make it attractive for real estate investors.
  • Madison, Wisconsin (University of Wisconsin-Madison): Madison boasts a dynamic arts scene, outdoor recreational opportunities, and a diverse population. The University of Wisconsin-Madison sustains a strong rental market, particularly in neighborhoods close to campus.
  • Gainesville, Florida (University of Florida): Gainesville offers a warm climate, cultural attractions and affordable living costs. The University of Florida’s large student population creates a consistent demand for rental properties in the area.
  • Ithaca, New York (Cornell University and Ithaca College): Despite its small size, Ithaca benefits from its picturesque surroundings and the presence of Cornell University and Ithaca College. The student population contributes to a competitive rental market, particularly in areas close to campus.
  • Chapel Hill, North Carolina (University of North Carolina at Chapel Hill): Chapel Hill features a charming downtown area, access to research opportunities, and a strong sense of community. The University of North Carolina at Chapel Hill drives demand for rental properties in the area.
  • Ann Arbor, Michigan (University of Michigan): Ann Arbor offers a blend of cultural amenities, a thriving arts scene and a highly educated population. The University of Michigan’s prestigious reputation attracts students and faculty members, supporting strong student rentals in a robust rental market.
The Power of Real Estate Investment

What are the advantages of real estate investment? Real estate can offer investors incredible potential beyond simply investing in college.

Passive Income Generation

Real estate investments offer the opportunity to generate passive income through rental properties. Rental income from tenants provides a steady stream of cash flow without requiring active involvement in day-to-day operations.

Diversification and Stability

Real estate investments can serve as a diversification strategy within an investment portfolio. Diversification means you spread opportunity and risk in your portfolio. 

Unlike stocks and bonds, real estate values tend to be less volatile, providing stability and a hedge against market fluctuations.

Tangible Asset Ownership

Real estate investment involves tangible asset ownership, providing a sense of security and control over the investment. Property ownership allows you to leverage physical assets to generate income and build wealth over time.

Appreciation Potential

Real estate properties have the potential to appreciate over time, increasing your net worth. Strategic property selection in high-demand areas or emerging markets can lead to significant capital gains in the long term.

Equity Build-Up

As you make mortgage payments and property values increase, you can build equity in your real estate holdings. Equity accumulation allows you to leverage your properties for future investments or access liquidity when needed.

Retirement Planning

Real estate investment can be a key component of retirement planning, providing a source of passive income during retirement years. Rental properties can be a reliable income stream to supplement retirement savings and social security benefits.

Tax Deductions and Benefits

Rental property owners are eligible for various tax deductions, including mortgage interest, property taxes, maintenance expenses and depreciation. These tax benefits can reduce taxable income and increase cash flow from rental properties.

Depreciation Advantage

Real estate investors can use depreciation deductions to offset rental income and reduce tax liabilities. Depreciation allows investors to allocate a portion of the property’s value as an expense over its useful life, providing significant tax savings.

Hedge Against Inflation

Rental properties hedge against inflation, as property values and rental income tend to increase over time. Real estate investments offer protection against the eroding effects of inflation, preserving the purchasing power of investment returns.

By highlighting the advantages of real estate investment, including passive income generation, long-term wealth accumulation, and tax benefits, investors can better understand the potential rewards and opportunities associated with owning rental properties.

Understanding the Basics of Starting a Rental Property Business 

Before diving into the world of real estate investment, it’s crucial to understand the basics of starting a rental property business

This journey begins with thorough market research to identify promising locations, understand the initial capital requirements and familiarize oneself with the legal landscape of property management. Planning and education are pivotal in this journey; prospective landlords must educate themselves on property selection, financing options and tenant management to ensure the success of their venture.

Key considerations include:

  • Assessing your financial readiness
  • Understanding the responsibilities of property management
  • Developing a solid business plan

It’s not just about purchasing a property; it’s about creating a business model that aligns with your college funding goals. Engaging in this business requires learning and adaptability as the market constantly evolves. 

For students and parents alike, embarking on this path offers a hands-on learning experience in financial planning and real estate, providing a means to fund education and valuable life skills that extend far beyond the classroom.

7 Steps to Launch Your Rental Property Business 

Launching a rental property business requires meticulous planning and a step-by-step approach to ensure success. Here’s how to get started:

Step 1: Begin real estate research. 

Begin with comprehensive research to identify lucrative rental markets. Look for areas with strong demand, such as nearby colleges, which can be particularly appealing to students and parents.

Step 2: Financially prepare. 

Assess your financial situation to determine how much you can invest without jeopardizing your or your child’s education savings. Ideally, you will have paid off the main home you live in and can use cash to pay for your investment property. Otherwise, if you must borrow to finance the property, ensure that everything makes sense financially. It should not be an emotional decision but a business decision.

Step 3: Choose a property.  

Choose a property that matches your goals and budget. Consider factors like location, condition of the property and potential rental income. Properties near campuses can be ideal due to the constant demand from students.

Step 4: Consider legal and tax requirements.

Understand the legal requirements for landlords in your area and consider the tax implications of owning a rental property. Consulting with a real estate attorney and a tax advisor may be beneficial.

Step 5: Decide on your management strategy. 

Decide whether you’ll manage the property yourself or hire a property management company. A management company can save time and stress as a busy parent, though it will impact your profits.

Step 6: Market your rental.

Develop a marketing strategy to attract tenants. Utilize online platforms, local advertising and college bulletin boards to reach potential renters.

Step 7: Balance responsibilities.

For college students and parents handling the opportunity together, balancing the responsibilities of managing a rental property with academic and personal commitments is crucial. Effective time management and organization are vital to ensuring your educational and business ventures thrive.

Financial Planning: Budgeting for Your Business and College 

Effective financial planning is critical when balancing the start-up costs of a rental property business with college expenses. If you choose to balance real estate with the cost of your child’s college education, check out some strategies to manage your finances effectively:

  • Outline all anticipated expenses for both your rental business and college costs. 
  • Include initial investment, ongoing maintenance, tuition, books and living expenses.
  • Prioritize the allocation of rental income toward covering college expenses, reinvesting in your property and building a contingency fund for unexpected costs.
  • Don’t overlook traditional financial aid options. Scholarships, grants and student loans can supplement your income from rental properties, reducing the financial burden.
  • Regularly review your budget. As your rental business grows, you may find opportunities to increase your rental rates or reduce expenses.
  • Consider how your rental business can support you financially, even after your child has graduated from college. Long-term planning can help ensure your investment provides sustained income and contributes to your financial independence.

By following these steps and focusing on immediate and future financial goals, students and parents can effectively manage a rental property business while covering college education costs.

Pros and Cons of Using a Rental Property to Fund College

Using a rental property to fund college expenses via FAFSA can have several advantages and drawbacks.

Pros

In addition to the tax benefits and asset appreciation benefits already mentioned, other benefits include: 

  • Stable income source: Rental properties can provide a steady income stream through rental payments, which can help cover tuition fees, accommodation costs and other educational expenses.
  • Long-term investment: Investing in rental properties offers the potential for long-term wealth accumulation and financial stability, which can be beneficial for funding college education and future endeavors. 
  • Ownership control: Unlike other forms of financial aid or loans, owning a rental property provides individuals with a tangible asset and a degree of control over their financial situation.

Cons

What are the downsides? Unfortunately, you’ll want to consider these potential downsides to investing in real estate for college costs: 

  • Initial capital requirement: Acquiring a rental property often requires a significant initial investment, including down payments, closing costs and ongoing maintenance expenses, which may pose financial challenges for some individuals or families.
  • Market risks: The value of rental properties and the rental market can be subject to fluctuations, economic downturns and changes in local market conditions, which may affect the property’s profitability and ability to generate income.
  • Property management responsibilities: Owning and managing rental properties involves various responsibilities, including property maintenance, tenant management, legal compliance and financial record-keeping, which can be time-consuming and require specific skills and knowledge.
  • Tenant issues: Dealing with problematic tenants, rental vacancies, property damage and legal disputes can be stressful and may impact the financial viability of the rental property as a source of funding for college education.
  • Cash flow variability: Rental income may not always be consistent or sufficient to cover all college expenses, especially during vacancy periods or economic uncertainty, which could require you to pull alternative funding sources or financial planning strategies.
Rental Income Can Fund Education, but Be Wise

Rental income provides a steady, passive revenue stream.

Many have leveraged this strategy successfully, such as buying a duplex for your daughter near campus so she could live in one unit while renting out the other. 

This approach can cover her tuition fees and provided living expenses, illustrating the tangible benefits of integrating real estate investment into education funding strategies. 

This practical application of entrepreneurship in real estate offers a viable pathway for students and parents aiming to mitigate the high costs of college education. However, it also comes with financial risks, management responsibilities and market uncertainties that you should carefully consider before pursuing this option.

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