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How to save money for college - 529 saving plan alternative - YouTube
Channel: Sean Katona
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i have a special guest today with some
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fun news
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we just purchased a new building and it
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was a brewery
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because we're getting our kids ready for
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[Music]
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college
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[Music]
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explain what you're doing with the 529
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okay so
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i opened a 529 account for both beckham
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and ellie and we were scrolling away
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money and i was talking to sean i was
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like
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why don't we buy a single family home
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and
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have the passive income pay down the
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loan and have this like nice little nest
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egg for them
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versus the 0.05 interest that we were
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making
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on it so i love the idea and i just
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thought hey let's do it at the
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commercial level
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uh where we maybe could pay for both
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kids college in one single shot exactly
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so we found a unique deal um tell them
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it's a little different than the last
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few weeks so
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it's a single tenant versus a strip
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center
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and uh what was really cool and what i
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love the most about this is sean was
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able to actually
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secure the lease a 10 year lease during
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the due diligence process
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and he was able to get three percent
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rent bombs every year
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in that ten year lease which is
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important and we made a cute little
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chart to kind of explain
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what that does to the value of the
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building and you know what happens
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basically with the cash balance the loan
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pay down and the equity so
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britt will tell you you know how it
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starts today and then what it looks like
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in the magic of compounding and time
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over a decade so walk us through this
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three things year one
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so our loan balance is 875 thousand
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dollars so
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over that 10-year period it actually
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drops down to 635 000.
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so we're building up you know about 200
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grand in equity there and then what
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happens to the value of the building
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over time the equity goes up so this is
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what i love so
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um 481 thousand dollars uh first today
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first year and then over that period of
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time that 10-year period it gets
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all the way up to 1.5 million dollars so
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that's huge so when they're
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ready to go to college we'll have a
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significant amount of money for them to
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go to usc
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or washington or you know if we choose
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an ivy league school
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and we even choose to pay for their
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education like there's the ability to do
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it there and two things that are
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affecting the value so
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the loan paying down or the equity i
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should say plus the rents going up
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directly correlate to the the value of
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the building so that's why that equity
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is steadily growing
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and then the the cash balance right so
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every year so the first year
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our cash balance and we're thinking and
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leave it in there right yeah exactly
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we're not going to touch it it's 36 000
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and then over that 10-year period um
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you're building it up to over 800
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000 which is huge so yeah if we account
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for the rent bumps
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and the loan stays constant we end up
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accumulating about 800
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grand in savings by doing nothing right
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that's just going into the account yeah
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wait wait and i want to tell them about
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the fact that they're triple net so for
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those that people don't know triple net
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you're literally having your tenant pay
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for insurances
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taxes and then the common area
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maintenance right so like
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a typical concern of someone might be oh
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the taxes and the insurance and like the
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property management and
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this is really structured where since
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it's a single tenant net lease deal they
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pay for all that and our base rent or
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our take-home cash flow ends up being
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very predictable and pretty much
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constant
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throughout the full decade and fingers
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crossed that we keep our tenants
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as long as they stay healthy and
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thriving and paying if not you know
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we'll cross that bridge when we come to
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it you'd backfill it with a different
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tenant
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but i think the risk to reward ratio is
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significantly high
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yeah getting in light like we had seller
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financing there were some cool things
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about this deal that we really liked
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you know we're interested in hearing you
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know your questions your comments your
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feedback about
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how this is set up i think this is great
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not just for college but no
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anything that you want to save for so
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shoot us a comment because i don't
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honestly want to know what you're doing
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to save for your own children's uh
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college education give us some ideas
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thanks for tuning in we'll see you guys
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on the next one
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