Rental property effects on qualifying for college aid

[John Renfer]

Hello my wife and I are looking to invest in our 1st rental property and were wondering how the investment effects our 2 teenage children's ability to qualify for college fonancial aid. Any thoughts? Thank you.

[William Joel Idleman]

The FAFSA will determine what, if any, financial aid your children will receive.  You should never make a decision to not invest in yourself or your future for fear of not receiving government help.  With one stroke of a pen, all that government aid is gone.  Most likely your rental property income will be classified as passive income.  Your property expenses and depreciation may offset your entire rental property income, showing a net loss even though you had positive cash flow.  I have several clients who have college savings/investment accounts for their kids.  I would also recommend looking at purchasing property where your kids are going to college and house hacking through them.  I had several of my friends' parents do that and it worked out pretty well for them.