Two weeks ago, my wife and I welcomed Rosie into the world -- our first child. Last week, I had her entire college education paid for without spending a single dollar of my own money. How? Through a single real estate investment.

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The theoretical plan was simple, if not necessarily easy:

  1. Buy a piece of property.
  2. Let my tenant pay off the mortgage over the next 18 years.
  3. Sell or refinance the property after it has been paid off.
  4. Use the proceeds to pay for my daughter's college tuition -- or whatever future she wants.

In my case, I purchased a four-unit property in my local area. Fixed up, it should be worth around $160,000 in today's market; and assuming an average increase in inflation of around 3 percent, I estimated the property to be worth around $275,000 in 18 years. This should be more than enough to cover four years of Rosie's college education -- or if she chooses not to go to college (which I would support wholeheartedly), provide the funds to start a business.

The beauty is, I'm not the one paying for it -- my tenants are. Each month, the mortgage is paid down lower and lower, but the funds are coming from the rental income on that property. At the same time, the value of the property will likely climb each month to keep pace with inflation -- increasing my wealth (and Rosie's college fund) each and every month.

What's even better, I bought this property for no money out of my own pocket. Sure, I could have put down a large down payment, but real estate is so much more fun when you can put together a deal using only other people's money. For this particular purchase, I used a private money lender to fund the entire purchase and a rehab of the property.

Once the property has been completely remodeled, I'll refinance the loan into a long-term, fixed-rate mortgage with a local bank. I call this the "BRRRR Strategy" (buy-rehab-rent-refinance-repeat), a strategy I'm very fond of and discuss in more depth in The Book on Rental Property Investing.

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Four Steps to Success

Of course, this strategy is notgoing to work for just anyone who buys a piece of real estate. Instead, it took several key steps.

First, I had to find the right property -- perhaps the most important step in this process. So, I spent a good amount of time prospecting for potential deals in my local market. This property came from a direct mail letter I sent to the owner several months ago. I determined my maximum allowable offer based on a thorough analysis of the property and negotiated hard to get the deal I needed. In real estate, you make your money when you buy -- so don't underestimate the importance of doing a proper analysis on any real estate deal.

Second, I'm going to need to rehab the property and make it as "tenant-proof" as possible. In other words, I want to ensure the property looks amazing (to attract the best tenants), but I also want to use building materials that can take a beating -- thus reducing the cost of maintenance over the next several decades.

Third, I'll need to make sure the property is continually filled and maintained. While I could do this myself, for this project I'll be hiring a property manager to take care of those tasks, to make this investment as passive as possible. Because I bought the property at the right price, each month the property will actually produce far more income that it will take to run the property, resulting in positive cash flow, likely in excess of $500 per month. So, not only is Rosie's college getting paid for -- but my own personal income has climbed significantly, as well.

Fourth, I'll need to either sell or refinance the property to pay for Rosie's college. That's right, I don't even need to necessarily sell this property to pay for her college. For example, let's assume that the property is worth $275,000 in the year 2034, the year my daughter will be entering college. We could sell the property and pay around 10 percent for sales expenses and another 20 percent in taxes, leaving us with around $200,000 for Rosie. OR I could simply get a new loan (refinance) for 70 percent of the value of the property -- taking out $200,000 in cash for Rosie and holding on to the property longer.

One Final Benefit

Finally, this strategy is exciting because I'm not just going to pay for my kid's education.

We've all known kids in college whose parents paid for everything, and many of them never took school seriously. Instead, as soon as Rosie is old enough to understand what's going on, this will become her property. She'll help run every aspect of it, allowing me to train her in the art and science of real estate investing. She'll graduate high school with more money smarts than anyone in her class, all while avoiding the crushing weight of college debt most students take on, thanks to one strategic real estate investment.

Related: 4 Simple Tips for Finding Incredible Real Estate Deals

You know, real estate investing is a lot like parenting: plenty of hiccups, messes, never-ending questions and maybe even some sleepless nights. It takes hard work, intelligence, planning and patience. But, in the end, the beauty of what you create trumps the drama -- every time.