How to invest in property and put your children through private school
Want to put your children through private school but don’t have the money? Or perhaps you have the money to pay for private tuition, but you fear it means postponing buying investment property.
The answer to both problems could be right in front of you, as buying an investment property could stand to grow your wealth and help you fund your kids’ schooling.
Michael Sloan, co-founder and director of national property advisory firm The Successful Investor, says investing in property can pay private school fees – the key to success is considering how much time you have in front of you, because the sooner you get started, the better.
“If you have a new baby and want to send your child to a private primary school, you may not have enough time for property to deliver the funds needed unless you have started investing already. So you may have to find the money elsewhere. But, high school can be a different matter,” he explains.
“If you buy the right property, you can expect to get about 6% capital growth, meaning it will double in value in 12 years. Buying a $500,000 investment property now should mean you would clear about $250,000 after capital gains tax in 12 years. Even with inflation, that should cover most private school fees.”
Of course, the more children you have, the more properties you need. You may also want to think about allocating a property to cover your child’s HECS debt, he suggests.
“Buying an investment property early enough can mean your child leaving university without debt,” Michael says.
Many parents, however, aren’t in the position to follow the above strategy. So does that mean you have to forget about property investing while your money goes towards private school funding?
“Not if you understand cash flow, which is a key component of property investing. Cash flow is king. You need an investment property with cash flow that won’t affect your ability to fund your children’s private school fees. Too many investors with little disposable income buy a property that looks great on the surface but sell it within 12 months because they ignored cash flow,” Michael adds.
“So, you can invest in property while putting your children through private school. But check the numbers very carefully and buy the right property that will work for you, not against you.”