Karun Vij had an aha moment during his college days that would change his life forever. He realized that the path to financial freedom was to invest in real estate.
Vij, who is based in Chicago and earns $183,000 a year as a regional sales manager for an automation supplier, has built a portfolio of student rental properties worth $2.3 million since 2016.
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“This is not a get-rich-quick scheme. This is a long-term investment,” the 33-year-old said on CNBC's Make It's Millennial Money series. “Some months you make a lot of money. Some months you break even, and some months you're in the red.”
Viji's real estate strategy is “buy now and hold forever.” Because once the property is paid off, the rent he continues to generate becomes profit, or passive income.
“For me, real estate is a long-term investment to build generational wealth,” he told CNBC. Here's how Vij made his fortune in real estate and how you can get a piece of the pie.
Rental for students
Vij first became interested in real estate investing while attending McMaster University in Hamilton, Ontario, Canada. He realized that landlords were making quick money by renting out bedrooms rather than renting out entire properties.
“When we did the math, we found that charging per room can actually accelerate profits compared to other real estate options,” he said.
So Biji, who was still a student, decided to save up for his first down payment. He completed his two full-year paid co-op placements, earning approximately $40,000 in each. He managed to save his $100,000 and used it to fund the purchase of his first rental property in Hamilton in 2016. He describes the experience as “the most exciting and nerve-wracking period of my life.”
“I was interested in student rentals for several reasons,” he said. “No. 1, because you can charge per room. That gives you a chance to generate higher profits.
“No. 2 is a steady demand and a steady influx of tenants. The university will never close, so there will always be demand for that house.
“And number three, many people think that one of the disadvantages is the high turnover rate with short-term leases. That’s true. But readjusting rents to current market levels. It’s also an opportunity to earn higher profits because you can.”
But being a landlord can come with its challenges, Vij admitted. He said he was “astounded by the amount of calls” he received from tenants and had to learn how to prioritize issues and communicate expectations to people in his properties.
If you are not adequately prepared, Bisi warns: “This business can drive you crazy.”
read more: Richer in Retirement — Why people who work with a financial advisor earn an extra $1.3 million in retirement
Build a real estate portfolio
If you share Vij's goal of building “true sustainable wealth” through real estate investing, but don't like the idea of being a landlord and dealing with tenants, there are plenty of other ways to get involved.
For example, you can buy shares in a real estate investment trust (REIT). REITs are publicly traded companies that collect rent from all types of tenants, from residential to commercial, and pass that rent on to shareholders in the form of regular dividends.
In the case of student housing, the last true REIT in the space, American Campus Communities Inc., was acquired by Blackstone in 2022 for $12.8 billion and has since been taken private. But there are many other residential REITs where you can get similar income properties.
You can also consider online crowdfunding platforms. This allows everyday investors to pool their money and buy real estate (or shares of real estate) as a group. Similar to REITs, crowdfunding platforms give investors access to all types of income-producing real estate, from rental properties to large commercial buildings such as office towers and retail space.
These platforms make real estate investing more accessible to the general public by simplifying the process and lowering barriers to entry.
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