How Parents Can Set Kids Up for Success Through Real Estate
Introduction
As parents, one of our biggest goals is to set our children up for success and financial security. While traditional paths like savings accounts and college funds are common, real estate can be an even more powerful tool for creating long-term wealth and teaching financial literacy.
This guide explores how parents can use real estate to give their children a head start in life—whether through gifting a property, teaching investment skills, or building generational wealth.
I implemented these strategies and invested for (and later with) my son, leading him to become a millionaire in real estate investments before he’s 25. You can dive deeper into the strategies and my specific experiences in my book here. And you can access the free worksheets to help guide you through over here.
1. Purchase a Property Early
One of the simplest ways to create a financial foundation for your child is to purchase a property in their name or earmark it for their future. Here’s how this strategy works:
- Invest While They’re Young: Buy a property when your child is small, such as a rental home or condo. Over the years, the property will appreciate, and rental income can be used to cover expenses like a prepaid college plan or their future living costs.
- Leverage Time: Real estate appreciates over time, and the earlier you invest, the more value the property can accumulate.
- Example: When my son was a baby, I purchased a small property with the intention of using the rental income to fund his education. By the time he graduated, the property’s value had grown significantly, and the income had paid for his tuition. This was one of my first purchases as a real estate investor and it has been one of the best ways to change my son’s financial future. I love this strategy because when you start investing for kids at a young age, the value of the real estate investments has a lot of time to grow. By the time they are adult children, the house will be paid off and the property values should have increased significantly.
2. Teach Kids the Basics of Real Estate Investing
As your children grow, involve them in the world of real estate investing. Teaching them about buying, renovating, and managing properties not only builds their financial literacy but also equips them with skills they can use for life.
- Start Small: Explain the basics of how real estate works—buying, renting, renovating, and selling properties. Just talking about these concepts are a great way to start conversations and encourage questions and thinking about real estate at an early age. This can provide a strong foundation and knowledge that helps with future success in thinking about financial goals.
- Hands-On Learning: Involve your kids in a project like a small renovation or a rental property tour. Let them see firsthand how investments are managed.
- Teach the Value of Leverage: Show them how borrowing responsibly can lead to greater wealth-building opportunities. If you don’t know how leverage can help you in real estate investing, you can learn more about it here.
3. Gift a Property as a Graduation Present
A unique way to help your child start their adult life is to gift them a property when they graduate high school or college. This could be a rental property, a fixer-upper, or a small home.
Now, I’m not saying you need to buy an entire home outright–but if you can find something inexpensive and you can help with the down payment, this can be life changing.
- Benefits:
- Provides financial independence early on.
- Teaches them responsibility for managing a home or rental property.
- Sets them on a path to building equity and wealth.
- Example: When my son graduated high school, I gave him a down payment on a small condo. Together, we renovated it, rented it out, and turned the experience into a valuable lesson in real estate investing.
4. Use Real Estate to Build Generational Wealth
Real estate is one of the most effective tools for creating generational wealth. By building a portfolio of properties, you can leave a lasting legacy for your children and grandchildren.
- Benefits of Real Estate for Legacy Planning:
- Provides consistent income through rental properties.
- Creates assets that can be passed down to future generations.
- Diversifies your family’s financial portfolio.
- Plan Ahead: Include your real estate assets in your estate plan, ensuring they’re distributed according to your wishes.
5. Help Kids with Their First Investment Property
If your child shows an interest in investing, consider helping them purchase their first investment property. You can provide support in several ways:
- Offer a Down Payment: Help them with the initial investment, such as a down payment on a small property. Funds can come, not only from you, but from other family members as well. When I bought the first rental property for my son, my parents also offered financial help with the down payment.
- Co-Sign a Loan: If they lack the credit history to secure financing, you can co-sign the loan to help them get started.
- Provide Mentorship: Guide them through the process of analyzing, buying, and managing their first property.
6. Establish an Airbnb or Rental Property
Another creative way to set kids up for success is by creating an income-generating property like an Airbnb. If your child is attending college, consider purchasing a property in their college town and converting it into a short-term rental.
- Why It Works:
- Provides extra income during their college years.
- Introduces them to property management and financial responsibility.
- Allows you to benefit from tax advantages and property appreciation.
- Example: I worked with my son to establish an Airbnb for game weekends in his college town. It became a fun and educational project that also generated significant income. He learned more about money management and also learned a good deal about customer service. It was important to keep guests happy so that he could get good reviews and obtain the “superhost” status which would lead to more bookings and future financial success. This experience provided lessons outside of his college education and was an excellent way for him to learn about another aspect of real estate investing. Here’s a look at that Airbnb project.
7. Teach Financial Responsibility Through Real Estate
Real estate is not just an investment; it’s a teaching tool. By involving your kids in the management of properties, you can teach them:
- Budgeting: Show them how to calculate expenses, set aside money for maintenance, and track rental income.
- Problem-Solving: Teach them how to handle tenant issues, unexpected repairs, and market fluctuations.
- Goal Setting: Help them develop long-term goals, such as saving for another property or growing their portfolio.
8. Renovate together
I love teaching people how to invest in real estate and earn passive income. And, I also love showing young adults how they can invest as well. A few years back I worked with a group of teens and had them work on several renovation projects in the townhome we were flipping. It worked wonderfully because I was able to talk with them about the real estate market, and they put in some hard work and had a lot of fun learning valuable skills and getting “hands on” with transforming a property.
The kids worked on flooring, adding cabinet pulls, installing a backsplash, painting, and creating an accent wall. Each child had specific goals on the project and they were given lots of positive reinforcement. It was a great way to contribute to these children’s education outside of the classroom, and led to more conversations about investing and turned into a financial education as well. You can learn more about that project here.
9. Make It a Family Bonding Experience
Real estate projects can also be an incredible way to bond with your kids. Working together on a renovation, rental property, or investment strategy fosters teamwork and builds lasting memories.
- Collaborate: Involve your child in the decision-making process, from choosing properties to designing renovations.
- Celebrate Wins Together: A successful project is a shared victory and a moment of pride for the whole family.
Conclusion, How Parents Can Set Kids Up for Success Through Real Estate
Real estate is a versatile and powerful tool for parents looking to set their kids up for financial success. Whether it’s purchasing a property early, teaching investment skills, or gifting a home as a graduation present, the opportunities to create a lasting impact are endless and can truly create long-term success for the next generation.
By starting small and involving your children in the process, you’re not only helping them build wealth but also teaching them valuable lessons about responsibility, perseverance, and financial literacy. Real estate isn’t just about properties—it’s about securing a brighter future for the ones you love.
Ready to take the first step? Explore my blog for more tips and strategies on using real estate to build wealth and create a legacy.
How Parents Can Set Kids Up for Success Through Real Estate
