Do This To Secure Your Child’s Real Estate Future

For many years, the idea of people purchasing a home was associated with young, starry-eyed first-time homebuyers eagerly awaiting the birth of their 2.5 kids. However, that image has drastically changed over the years. In 1981, the median age for someone to purchase their first home was 29. Today, that median age has jumped up to 36 years and is likely to continue to skew older due to higher mortgage rates and the ever-increasing cost of housing.

As millennials are currently in their prime home-buying years, many of them are struggling to purchase a house, despite rents often being on par with the equivalent mortgage payment for similar types and sizes of housing. The main challenge they face is the down payment, which can cost up to $250,000, especially in places like the Bay Area. To overcome this challenge, many millennials are getting help from their families. However, this poses an uphill battle for them, and Gen Z and the generations that come after them will likely have it even worse.

"When your child is ready to buy, you can sell your fully paid-off property to fund a new home in their desired location."

If you’re a parent, you should know that one solution that has been gaining popularity over this real estate issue is purchasing an investment property for your children when they are young or even before they are born. Pick an affordable location where the property will cash flow at least neutrally and rent it out. The tenant will then pay the mortgage for the next 30 years. By the time your child is ready to purchase their property, you will have a fully paid-off property that you can sell and use those assets to purchase a property in an area where your child would like to live.

For example, with a $50,000 down payment, you can purchase a $200,000 single-family home with three beds and two baths in various cities such as Tulsa, Des Moines, Winston-Salem, Houston, or even Cambridge, Massachusetts. Reach out to me if you’d like me to introduce you to any of my go-to agents in those locations. With a modest 3% appreciation rate over 30 years, your $50,000 down payment will hopefully grow into a property worth around $470,000. This amount can cover a decent down payment anywhere your child would like to live, even in the Bay Area.

If you'd like to discuss this strategy or if you're considering buying, selling, or investing in real estate anywhere in the Bay Area or wine country, give me a call. I'm happy to help.

I made a mistake when recording the video by referencing Cambridge, Massachusetts as one of the cities where you can buy a house for $200k or less. I should have said Cambridge, MARYLAND. Cambridge, MA prices are similar to the Bay Area's - my apologies for any confusion!