Real Estate is the easiest investment vehicle to understand. However, it is also the hardest to get into. Right now, Kris and I have 3 homes. One in Arizona and two in Florida. My lovely mother also said she will leave us her home in Arizona as well. The best feeling in the world is knowing that my kids already have a house each. That they will be protected from this crazy world. But, more importantly, our kids are learning how to leverage real estate to make truly spectacular returns. I personally believe real estate is the greatest way to build wealth in America. But you have to know how to leverage your assets. Make your homes work for you. Here is how I would tell my kids to leverage each of the homes.
Home #1: Arizona, 4 bedrooms, 3 bathrooms, 2500 square feet, and 3 acres of land. We pay $1400 a month for this house. If one of the kids were to move into this home and build a family I would advise them to rent out one room. The house has 2 masters, so renting out one master for $700 would make the effective mortgage $700 for the kids. Also, with 3 acres of land, they can leverage the land for things like RV parking or a small wedding venue. The possibilities are endless. If the kids want to stay in Florida, they can rent the home for $1600-$1700. Making a small profit until it is paid off.
Home #2: Florida, 4 bedrooms, 2 bathrooms, and 1660 square feet. Kris and I bought this home when we left Japan in 2017. A friend of mine told me if I was going to Florida, it would be wiser to buy than rent. He was correct. We bought in for $180,000 and the house is already worth $230,000. But more importantly, we pay $1100 a month. We can rent out the home for $1500-$1600 a month. Jeez. Even better, when Kris and I started our journey to enlightenment, we started renting rooms in the home. We rented 2 rooms for $500 each. If my kids wanted to stay there, they could add some value to each room (HBO, larger refrigerator, better furniture, etc..) and easily command $650-$700 a month, per room. Crazy Money! These are all things we discuss with our kids.
Home #3: Florida, 4 bedrooms, 3 bathrooms, 2500 square feet, and 3 acres of land. Wow, this is our dream house! Kids love this house. I see them living here for a long time. There is so much room. Kris and I will probably add a couple of manufactured homes for us and our parents. Kids can have the main home. But the property is so perfectly located. Kris wants to open a small cafe, selling Russian BBQ and beer. We pay $1750 a month. We rent out the 2 masters for $800 each. You do the math. That’s why I say real estate build wealth faster and more efficiently than any other method. Kids will have their option on how to monetize the home.
Home #4: Arizona, Mom’s home. Mom bought this home a couple of years ago. She pays $200 a month and rents the home for $750. Kids can do the same. I am so proud of my Mom. She did everything to keep a roof over our heads and she deserves the world. Mom and I have been working closely together since I got married in 2006. My wife and my mom are super close. I am so happy to see that she is using her real estate to leverage her wealth. I couldn’t be more proud of her journey and our relationship. The plan is to hopefully have mom come stay with us, forever.
As you can see, real estate done correctly will net you wealth. Lot’s of wealth. I will get into the basics and renting out rooms and homes, and how to build value in your products. Everyone wants somewhere nice to live and they are willing to pay for it. Teach your kids and allow them to build wealth early in their lifetimes.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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