While most of the college life revolves around classes, parties, and dating, there are a few students who choose to work towards achieving financial independence by investing in real estate. But investing in real estate as a college student is often deemed to be nearly impossible. This is mainly due to the fact that college students often have limited money, limited time, limited credit, and limited professional reputation. However, making money in real estate is possible for people of all ages, including young investors still in college. By investing in real estate as a college student, you will be able to learn about the business and secure your financial future much faster.
I want to share with you 4 real estate investment strategies that college students can use to start building their wealth.
1. Wholesaling
One awesome way of investing in real estate as a college student is through wholesaling. Wholesale real estate involves finding good deals and selling them to other real estate investors without necessarily owning the investment property. A wholesaler will find a seller whose property is yet to go on the market and then find a buyer and take a cut of the selling price. In essence, you are being paid as the middleman connecting a motivated seller with a buyer.
Investing in real estate as a college student through wholesaling is great because you can do it without having assets or money. If you are in college and thinking about becoming a real estate investor, wholesaling may be a good way to start. You can use the money you make from wholesaling to pay off your student loans or put it into bigger real estate investments.
Nevertheless, it is not as easy as it may seem. Wholesaling will require good networking, education, heavy marketing, hard work, and commitment. But by mastering the art of wholesaling, you will also be mastering the art of finding great real estate deals. This is very important in building a solid foundation as a real estate entrepreneur.
2. House Hacking
Another strategy you can use for investing in real estate as a college student is house hacking. House hacking involves buying a multifamily investment property, living in one of the units and renting out the rest. For instance, you can gain income from the other units by renting out on Airbnb.
If you get a great deal and manage the investment property effectively, the rental income from the tenants can help pay your entire mortgage and even provide you with some extra cash monthly. The income you get should cover most or all of your housing expenses. This real estate investment strategy can help you save a lot of money and possibly even live for free. You will build equity as you pay down your mortgage, which can be used for the purchase of another investment property in the future. When you decide to move out, you can keep it as a pure rental property, thereby improving the cash flow. The skills you will gain from being a landlord will also be of benefit to you later in your real estate investing journey.
Acquiring property for house hacking can be tough for a student. Go for loan programs that require little or no money down. A popular example of a loan program with a low down payment is the FHA. You can also partner with a family member so that you can utilize their income and credit to qualify. Moreover, you can utilize seller financing where the seller acts as the bank or rent-to-own.
It is also possible to get into house hacking without owning property. For instance, you can rent a four-bedroom apartment for $650 monthly and then rent out the bedrooms for $250 each. This way you will be able to live in the house almost totally for free, only paying house bills like water, TV, and electricity. If you choose to go this route, always ensure that your landlord approves.
Related: House Hacking: Your Entry into Real Estate Investing
3. Real Estate Partnerships
Investing in real estate as a college student can also be done without borrowing money from mortgage lenders, family or friends. One way to do it is through real estate partnerships.
A young investor in college might not have enough funds for a down payment. However, he/she may possess the skills or is eager to learn how to invest in real estate. In this case, the college student can find a real estate investor that has enough funds to acquire the property. The investor may want to diversify and invest their money in real estate but lacks the knowledge or time. The college student will be responsible for the management of the different aspects of the investment property.
Ensure that the terms of the real estate partnership are set and agreed upon. The responsibilities and the allocation of profits should be fair to all partners involved in the purchase.
4. Real Estate Syndications
A real estate syndication is also another good way of investing in real estate as a college student. A real estate syndication is a group of investors who pool funds together to invest in big real estate projects, which may be too expensive for individual investors. It is usually a transaction between a sponsor (responsible for the purchase and management of the properties) and a group of investors who provide the funds.
As a college student, you may not have access to enough cash to acquire an apartment complex. However, you may have enough to partner with other real estate investors. Joining a real estate syndication is one of the best ways to invest in real estate for passive income. It is also less risky. However, you will not have control over the investment properties when investing in real estate as a college student with this strategy.
Related: The Ultimate Guide to Real Estate Syndication
The Bottom Line
College is not just about classes, parties, and dating. It is possible to become a real estate investor as a college student. Even though investing in real estate as a college student may seem crazy, many have done it and continue to do it. Students can use their time in college to begin their real estate investing journey. You may not become a millionaire during your college years. However, you can get a head start that could help you achieve financial independence much faster.
If you have not started, you too can learn how to invest in real estate in your 20s and start building your portfolio. The first thing young investors need to do is to get enough knowledge of real estate investing. Be sure to do your homework before jumping into any strategy. There are many sources of information out there on how to start investing in real estate. You could try different real estate investing blogs and books that are specifically about investing in real estate as a college student.
Mashvisor is the place to start. We provide real estate investors with the knowledge and tools necessary for successful real estate investing. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.