Jan 16, 2024
Karun Vij had an ah-ha moment in college that would change his life forever: he came to the realization that his path to financial freedom was to invest in real estate.
Since 2016, Chicago-based Vij — who 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.
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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 Make It's Millennial Money series. “There's some months that you're going to make a lot of money. There's some months you're going to break even, and there's some months that you're going to lose money.”
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Vij’s real estate strategy is “buy now, hold forever” because once his properties are paid off, the rent he continues to generate will become profit — or, in other words, passive income.
“Real estate, to me, is a long-term investment to build generational wealth,” he told CNBC. Here’s how Vij made his real estate riches — and how you can get a piece of the pie.
Student rentals
Vij first grew interested in real estate investing while studying at McMaster University in Hamilton, Ontario, Canada. He realized landlords were making a fast buck by renting out bedrooms, instead of full properties.
“When I did the math, I realized that by charging per room, you could actually accelerate your gains compared to any other real estate option,” he said.
So, while still a student, Vij committed to saving for his first down payment. He completed two, full-year, paid co-op placements, earning around $40,000 at each. He managed to save $100,000, which he then used to buy his first rental property in Hamilton in 2016 — an experience he described as the “most exciting and nerve-wracking time of my life.”
“I got into student rentals because of a few things,” he said. “No. 1, because you can charge per room. That gives you an opportunity to generate higher profits.
“No. 2 is steady demand and steady stream of tenants. You're always going to have demand for that house because colleges and universities don't shut down.
‘And, No. 3, a lot of people think that one of the negatives is the high turnover because of the shorter-term leases. That is true. But that is also the opportunity for higher gains, because you can now readjust your rent to the current market levels.”
However, being a landlord does come with its challenges, Vij admitted. He said he was “surprised by the volume of calls” he received from tenants and had to learn to prioritize problems and set expectations with people in his properties.
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If you’re not fully prepared for that, Vij warned: “This business could drive you crazy.”
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Build out your real estate portfolio
If you share Vij’s goals of building “real, sustainable wealth” through real estate investing, but you hate the idea of being a landlord and dealing with tenants, there are many 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 they pass that rent to shareholders in the form of regular dividend payments.
In the case of student housing, the last true REIT in the sector — American Campus Communities, Inc. — was purchased by Blackstone in 2022 for $12.8 billion, after which it went private. But there are many other residential REITs, where you can get exposure to similar income properties.
You may also want to consider online crowdfunding platforms, which allows everyday investors to pool their money to purchase property (or a share of property) as a group. Like REITs, crowdfunding platforms can give investors access to all types of income-producing real estate, from rental properties to large commercial buildings like office towers and retail spaces.
These platforms make real estate investing more accessible to the general public by simplifying the process and lowering the barrier to entry.
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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.
