When I was in college, a friend dared me to eat a 2 lb block of cheddar cheese in one sitting.
Not understanding the intestinal consequence of such an action, I accepted the challenge and – to this day – I have a hard time enjoying cheddar cheese. The worst part is: I didn't even win the challenge; three-fourths through I couldn't do any more. All that pain and no gain.
However, I don't regret actions like that. College is suppose to be a time to step outside the confines of structured reality and do stuff no one else does. College is the time of your life where your mind expands as you take in new experiences, new relationships, and new knowledge. It's a time to be a little crazy and take on new adventures.
As such, today I want to talk about a subject most college kids would consider crazier than eating a 2lb block of cheese: investing in real estate in college. While most of the college scene is focused on finals, grad school, girls, and parties… there are a select few who choose to begin building their wealth and financial freedom through real estate while still in school.
Below I want to offer three unique ways for you to start building that wealth, through investing in real estate in college.
1. Become a Sponge
There are a lot of skills college can teach you, but perhaps the most important is the skill of absorbing knowledge. For a lot of students, going from high school to college is like being thrown into the deep end of the pool with very little training: you quickly adapt or drown. Therefore, I think the first thing a college student who wants to invest in real estate needs to do is become a sponge.
There is so much information about real estate investing out there, and the vast majority of it is free online or easily picked up a local library. There are thousands of books out there that offer every trick, tactic, and example for building wealth through real estate (see my top 21 favorite real estate books here).
Because of the information overload, it's important you treat real estate like your college curriculum. There may be a 1,000 classes offered at school (many exciting or enjoyable) but only a select few will add benefit to your future career path. The same is true for real estate. There are 1,000 ways to build wealth through real estate – so focus on the “classes” that will fulfill your ultimate goals. Start with more general real estate books like “Rich Dad Poor Dad” or “The Unofficial Guide to Real Estate Investing” and move on to more specific choices later.
In addition to books, there are numerous other methods for building your educational base. Information has been democratized in the 21st century and there are no longer gatekeepers to education. Therefore, I encourage you to find the method of learning that suits you the best, such as:
- Blog Posts
- Internet Forums
- Real estate meetups
- Local real estate mentors
- Mastermind groups
College is the perfect time to use your study skills to study something that will actually improve your life. Don't waste all your college years learning about the life-cycle of an African tree frog. Take some initiative and study how to build wealth with real estate.
Wholesaling is a real estate strategy that focuses around finding incredible deals and selling those deals to other real estate investors without every having to own the property. This might sound a bit confusing, so let me give you a brief example of how this might work.
While delivering pizzas one night, you stumble across an abandoned house. You find the owner through the public records and strike up a conversation. The owner, Bob, left town for a new job, but couldn't sell this home because of the poor condition. You agree to work as a “wholesaler” and you sign a contract with Bob agreeing to either purchase his house for $50,000 or you'll find someone else who will purchase it for that amount. Then, you speak with Sarah, a local house flipper (someone who buys, remodels, and resells homes) and she agrees to pay $55,000 for the home, knowing you are getting a $5,000 markup on the deal – but it still makes financial sense to her. You sign the necessary paperwork, and “assign” the contract to Sarah. She then buys the property for $50,000, gives you $5,000, and Bob is now free of his vacant house burden. A true win-win-win, and you did the whole thing in your spare time with no money out of pocket.
Wholesaling is found in every aspect of the business world as a middleman between manufacturers and the retail stores. Real estate is no different, and a wholesaler can play a valuable role in the real estate transaction. However, wholesaling may sound easy when outlined in a simple blog post like this one but – make no mistake – wholesaling is a business that requires work, intelligence, and time.
Those who master the art of wholesaling are also mastering the art of finding great deals, which is incredibly valuable for any real estate entrepreneur. By engaging in wholesaling while in college, you are able to build a solid foundation for the rest of your real estate activities.
Keep in mind, this was just a teaser into the world of real estate wholesaling. Be sure to do your homework before jumping into this strategy! Check out our Ultimate Guide To Real Estate Wholesaling.
3. Hack Your Housing
Finally, lets get to an actionable strategy you can use in college to get into the real estate game, start building wealth, and have a good time while doing it. Furthermore, this strategy can also help you save money and possibly even live for free, helping you keep your student loan debt at a minimum or non-existent.
I call it “hacking your housing.”
The concept is simple: find a large house or small multifamily property while in college, live there, and rent out the other bedrooms or units to others. If you get a good enough deal and manage effectively, your “tenants” can help pay your entire mortgage and maybe supply you with some extra cash each month.
There are a few simple strategies you can use to acquire this property. Ideally, you'll want to actually purchase the property- which can be tough for a college student. However, if you have family that can partner with you on your endeavors, you can utilize their credit & income to qualify. If not, you could also utilize “seller financing” (where the seller actually acts as the bank, so no bank loan is needed) or a “rent-t0-own” (you rent the property with a legal contract allowing you the exclusive right to manage it now and purchase it in the future) strategy to get the property under your control.
In reality, you don't even need to own the property to make this strategy work. While I was in college, I rented a 4 bedroom apartment for $800 per month – and then rented out three of the bedrooms for $300 each. In other words, I was able to live almost entirely free, paying only the electric and TV bill. If you go this route, just be sure your landlord is aware that you will be adding roommates to the lease and require them to go through the same screening process the landlord required you to go through.
Perhaps the greatest benefit of the “house hacking” strategy is the ability to master the art of landlording in a low-risk environment. The skills you'll gain during this time will benefit you greatly later on in your real estate journey.
As you can see, college is not just about parties, dating, stress, and classes.
If you are smart about it, college can be a terrific time of your life to jump into the world of real estate investing and start building a foundation for the rest of your life. You may not become the next Donald Trump during your college years, but getting a head start could help you reach monumental status much earlier than the rest of the world.
If you have any questions or comments about the information above, let me know by leaving a comment here and I'll be sure to help out all I can!
Brandon Turner (G+) is a real estate investor who has been buying property since he was 21 years old. He is also the VP of Marketing and Communications at BiggerPockets.com, the real estate investing social network where he writes, speaks, and podcasts a lot about investing in real estate at a young age.