I’m 44 years old with a few million dollars saved – should I sell my rental property to fund my kids’ college?

If you’re incredibly wealthy, especially for your age, you may consider making a few sacrifices to give your kids a head start in life. When it comes to this 44-year-old Reddit user who posted on r/ChubbyFIRE just two weeks ago, they’re wondering if they should sell off one of their rental properties (a major cash flow generator) to fund the educational pursuits of their children.

They claim to have a couple of million across a wide range of accounts. With a nearly-$3 million brokerage account, almost $900,000 in retirement, and ample cash ($375,000), among their other assets, they have a lot of flexibility.

There are options that don’t include selling the cash cow

Personally, I think there’s no reason to rush into a rental property sale, especially when it comes to something as illiquid as property. Sell at the wrong time, and you will take quite a hit on the chin. While selling a cash cow of an asset could make sense if they’re keen on retiring early, there are alternative options as the individual gradually transitions into an early retirement.

With more liquid assets readily available in the form of cash in savings and investments, perhaps allocating a small portion towards a child’s post-secondary education could make a lot of sense. Indeed, college doesn’t have to cost a small fortune (they view $340,000 as an amount to stash in 529 accounts) and one doesn’t need to make the contributions overnight.

Either way, I wouldn’t view selling a rental property as necessary because one’s kids may have a change of heart and go down a path that doesn’t include college or university. In any case, I think meeting up with a financial planner could do the individual a lot of good, as they seem to be getting a tad ahead of their skis.

College is expensive. But it doesn’t have to push one into a rushed asset sale.

Of course, tuition is expensive and it’s only going to get even more expensive with time. But is more than a third of a million too much to put aside?

That’s the big question that only the Reddit user has the answers to. Of course, it’s nice to push one’s children to go to Oxford or Harvard. But realistically, they may be content with sticking with a lower-cost in-state college or even pursuing vocational school. These cost-effective solutions won’t break the bank.

Even if one’s children are set on an expensive Ivy League education, you don’t have to fund 100% of their educational pursuits. If they’re set on something ambitious, they can borrow to go to school. However, the Reddit poster probably won’t have all too much luck borrowing to fund their “chubby” early retirement.

Additionally, the cash flow from one’s passive income fund (real estate, savings interest and dividend stocks) could be used to help one’s children pay down their student loan debts over time. All considered, I think there’s no sense in rushing asset sales for now.

The bottom line

Perhaps it’s best to play things by ear and contact a financial advisor so that one can maintain their options until there’s greater clarity on the magnitude of expenses to come in the near future.

Rushed selling of anything is seldom a good idea, especially if we’re talking an appreciating asset that’s generating a handsome amount of cash flow in the form of rent. Arguably, such a cash cow could be one of the pillars of an early retirement.

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