How to Invest in Real Estate Before You Graduate College


Everyone’s familiar with the term “struggling college student.” It’s a true cliche that affects millions and it’s hard to escape the stigma. But many millionaires and billionaires don’t wait until they graduate college to start building their fortunes. If you interview top grossing entrepreneurs and investors, they’ll tell you they were very young when they made their first investments.

A lot of entrepreneurs choose real estate investments as their first ventures. These are considered more stable and higher-grossing than others, and the barrier for entry is often lower. In fact, you could get involved without a degree or much cash.

That being said, real estate investments are a great way to lose a lot of money if you don’t approach them intelligently. If you’re a poor college student, here’s what you should know about investing.

Find Feasible Financing

Unless you’re sitting on a trust fund, you probably don’t have substantial capital. In fact, you probably have a negative balance when you factor in your student loans. Unless your debts are unreasonable, this shouldn’t be a huge concern. Using the capital you have, there are options for investing without a lot of money.

A popular option is real estate crowdfunding, in which you, as the primary investor, put in a small amount of money and offer to run point on the project. You’ll make the purchase, set up the renovation, and organize the money. Other investors will contribute money in exchange for a certain return on the project. Each of you will receive a return and benefit from the proceeds.

There are other ways to make an investment with low cash flow, such as real estate investment trusts (REITs), hard money lenders, and private investors. It’s important to note that these forms of financing aren’t easy to obtain. You’ll want to develop good relationships with financiers and business people, developing a way to demonstrate your ability to make a success out of this project. Do thorough research and discuss your options with professors and money lenders.

Be in Good Financial Shape

The options mentioned above for financing your rental can be done without a lot of money on hand, but you’ll still need to run a tight financial ship. Qualifying for a loan, whether it’s from a conventional or private lender, requires a decent credit score, a good debt-to-income ratio, and a decent savings account.

Qualifying for loans without help isn’t easy, but getting help isn’t too hard if you have someone supporting your venture. A parent, friend, or business partner with good credit and financial experience can co-sign the loan to help you qualify for a lower down payment and interest rate so that you can afford your monthly payments and establish a history of good credit for future investments.

Buy a Single-Family Rental House

Rental properties that are near a college or university make great investments. You live in the neighborhood, so you’ll have some idea of the prices and quality expected in the area surrounding the college. Additionally, if you own a rental home, you can live in the house and rent out the extra rooms. Depending on what you charge for rent, you can live there virtually rent-free while you’re going to school. It’s a win-win situation!

It’s also easier to get financing for a single-family home than for an apartment complex or a commercial investment. You can use traditional financing and make a few updates (such as adding a kitchen and bathroom to the basement so that you can rent out both halves). The rent you collect will pay for the mortgage and more.

Wholesale Properties

Wholesaling is a great form of investment for college students without a lot of cash because it doesn’t require personal money. You’ll find great deals on properties and then sell them immediately to investors for a slightly higher price to make free money on the exchange.

You can wholesale properties using the multiple listing service (MLS)  if you can find properties listed well below their book value, but a better wholesaler will buy properties that aren’t listed. This is a great practice for the cash-strapped college student because not only can you make great returns to pay off your student debt, but you can also learn a lot about finding great deals, which will be incredibly useful for your future real estate investment prospects.

Any of these ventures won’t make a ton of money quickly, but with the right planning, research, and investment intuition, you can make more out of your limited income and work towards a brighter financial future before you earn your degree.


The author Kathrina

Kathrina is an enthusiast of all-things college lifestyle. She's the expert!

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