Why You Should Buy Your Baby a House
Real Estate Investing is a long game. The timeline of birth to ‘leaving the nest’ is a great time-frame for investing. It will set you up to support your child in pursuing their dreams, whatever they may be!
Becoming a new parent is wild. All of a sudden, you’re truly and deeply responsible for another person. Below are a few reasons it might be a good idea to purchase real estate with your wee-one in mind.
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THE GENERAL IDEA:
Purchase a Property
Have renters pay the mortgage for 18+ years
Let the real estate market appreciate, as it naturally does
Sell or re-finance to capture equity
Use the proceeds to pay for college (or something else awesome)
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A FEW THINGS TO THINK ABOUT
The national average appreciation rate is 4% year over year. Some markets outpace that, compounding your equity.
There can be significant tax advantages to owning investment property - and you should talk to your tax person about them!
When considering this, you may also want to look at 529 College Savings options. This is another great conversation for your tax person.
If your property cash-flows (which is ideal for many reasons) you will be able to roll that into other savings / opportunities for yourself or your child.
Think of the learning opportunity as they reach teenage years! You’ll be able to teach your child about investing, appreciation, depreciation, ROI - and give them a solid financial education & footing. You may even bring them in to help manage the property.
Can also be valuable as an estate planning tool.
If your child decides to go to college, you can leverage your current real estate, to purchase a property close to their campus, and rent it to their friends - in some cases, eliminating housing costs. Depending on markets and timing, this may create another equity position for you as well.
