Co-Sign or Co-Invest? Smart Strategies for Helping Your Kids Buy Property

 This episode is all about helping the next generation-our kids-start building wealth now instead of waiting until "someday."

If you’re a parent, auntie, mentor, or just someone who cares deeply about legacy, this one’s for you. We’re talking about creative ways to get young adults into their first property—even in today’s wild market. Think co-signing, first-time homebuyer programs, seller financing, and real talk about what to do (and not do) when helping your kids invest.

We also cover the not-so-obvious stuff: how to avoid turning a generous gift into a long-term headache, why it pays to model investing instead of just preaching it, and what questions to ask before saying “yes” to buying that condo near campus.

It’s fun, practical, and a little sentimental—in the best way. Let’s talk about planting the seeds of generational wealth, one door at a time. Here are the top takeaways:

1. Get Creative to Help Your Kids Enter the Real Estate Market Early

It’s no secret—homeownership feels out of reach for many young adults. But this episode reminds us that with the right tools (and mindset), parents can help their kids take the first step toward building real estate wealth.

2. Ownership Beats Renting—And It Can Start During College

Why pay rent to someone else when your kid could start building equity instead? Ann shares a case study that reimagines the college rental years as an investment opportunity.

3. Real Estate is a Long Game—Start Early for Compound Gains

Buying early isn’t just about a good deal—it’s about time in the market. Ann explains how compound appreciation and rent growth can outpace the cost of college itself.

4. Seller Financing Is an Underrated Wealth-Building Strategy

Traditional financing doesn’t work for everyone—especially entrepreneurial young adults. Seller financing could open new doors for families willing to think outside the box.

5. Help, Don’t Control: Teach, Model, and Let Them Lead

Helping your kids into homeownership works best when there’s alignment, not pressure. This episode emphasizes modeling wise investing and allowing room for their buy-in.

Want to learn more about real estate investing? Hop on the waitlist for the Soulful Investor Society, a community membership for real estate investors and those who'd like to get in the game. Once on the waitlist, you'll be the first to know when the doors open AND you'll get lots of amazing freebies, including a FREE 1:1 coaching session with me, where we'll map out your plan from start to finish, so you can finally buy that investment property an

Transcript

Welcome to A Few Good Doors, podcast created to show you just how possible investing in real estate is for most Americans and how it can be an incredibly powerful tool for creating wealth over time. Do you feel like it's too late or you don't have enough money? Listen up. If you can qualify for one mortgage, I can show you how to become a real estate investor.

Once you embrace the how and the why, you can repeat the process. Acquiring four or more properties over the course of 10 to 15 years Can and should have a massive wealth effect. I believe that everyone deserves to live up to their full potential and having good people with money is what will change the world.

I'm your host, Ann Reed, and my mission is to help you make the world a better place with a few good doors of your own. 

  Ever wish someone had handed you the keys to real estate a little earlier in life? Same. That's exactly why today's episode is all about helping the next generation. Our kids start building wealth now instead of waiting until someday. If you're a parent, auntie, mentor, or just someone who cares deeply about legacy, this one's for you.

We're talking about creative ways to get young adults into their first property, even in today's wild market. Think co-signing, first time home buyer programs, seller financing, and real talk about what to do and not do when helping your kids invest. 

We also cover the not so obvious stuff, how to avoid turning a generous gift into a long-term headache. Why it pays to model investing instead of just preaching it. And what questions to ask before saying yes to buying that condo near campus. It's fun, practical, and a little sentimental; in the best way.

Let's talk about planting the seeds of generational wealth one door at a time.

  I have my dear friend, podcast producer, assistant, Jack of all trades, friend with me, and we want to talk about, we both have kids that are young adults, in different varying ages. Between the two of us, they range from 18 to 23. 

Yes. 

We were having a discussion, about how to help your kids that are young adults get into the game of real estate.

I think there's a lot of concern with kids that age that, owning property seems out of reach and for many it is if they're starting from scratch. If kids have gone to college and maybe have student loan debt, maybe they're not getting jobs right away out of college.

There's a a lot of barriers to entry for kids to own a home. And for parents that would like to help if their kids get into owning property, either just to live in or as the first step in building their own real estate portfolio, there's a lot that parents can do that can be really beneficial where you leverage the, credit worthiness of the parents and maybe some of their funds and also leverage the fact that you've got first time home buyers, that have some beneficial potentially, programs available to them. I always talk about how there's a lot of different tools that we have in our tool belts and everybody has different tools to use, for real estate investing.

So it's a matter of identifying those tools and then figuring out the way to use those to align with the goals that you have for, acquiring or owning real estate. So that's what we're gonna talk about today. 

Fantastic. Usually kids spend the first couple years in dormitories and then the next couple of years they spend renting a house or an apartment with a bunch of roommates.

What really got me thinking is that this week in the city of Portland on the east side, there is a one bedroom, two bath apartment for 2 99. I called you and said, I think this might be a good investment to buy this with my son and have him pay the rent and then he can go off and own this piece of property in the end.

I've also heard where, when I've lived in other cities, where parents literally buy a house for their child while they're in school, it gets rented out to all their roommates and stuff. And at the end of the school year, or at the end of their time in that school, they either sell it off or they keep it and continue to rent it, which I think is the smarter option.

So when you took me to see the place, let's talk about some of the things that we saw and how that might benefit. 

First of all, I have to be really careful of fair housing laws what we're talking about is a desirable place it's a historic neighborhood on the east side of Portland.

It is super walkable. There are, it's, they've got highly ranked schools, which even if you don't have kids, I think is something to look at. You have to kind of take it with a grain of salt if you are looking at stuff like that for your kids, because , i don't believe a one size fits all for schools, but it's important because just like, you look at certain factors when you're buying a home, a highly ranked school does play into that. People will be more eager to buy in a highly ranked school district.

I do think that people look at school rankings, it's gonna be easier to sell certain properties when you have highly ranked schools. This particular area has, highly ranked schools, very walkable, close to what I would call Destination Street, which is like coffee several destination streets are very close.

Coffee shops, cute restaurants. All sorts of great stuff. And that price point in particular in Portland where the average price point in the area is over 550,000. So to have something that is 2 99 in an amazing place is definitely something to take a look at.

As you can imagine at that price point, it's, it probably is more of a property that is suitable for a first time home buyer. Somebody that, maybe has a roommate but doesn't need a ton of space. And, at that price point it's an affordable mortgage, relatively speaking. So it, it's a lot more feasible for a young adult to get into something like that.

And if they have the help of a parent. When I talk about the help of a parent, this is a little sidetrack. There's a lot of ways that parents can help kids get into properties, and sometimes it's financial, sometimes it's co-signing for the young adult. So what that means is, if the young adult doesn't qualify for the loan on their own, based on their, income because as a student or sometimes even just getting out of college, they may not have the work history and W2 history that helps them qualify for the loan.

But if they have a parent that is willing to co-sign on the loan for them, then they take into account the parent's ability to qualify for the loan, and that's how the, the young person qualifies for loan if they can't do it on their own. So those are kind of the two main ways that parents can help.

When I talked earlier, there's also first time home buyer program. So if you're not in a position  are not able to help them financially with the down payment and closing costs to get into the property, there's a lot of low interest or, low percentage, lower down payment programs.

And there's even in the city of Portland, and some of surrounding areas, there's first time home buyer down payment assistant grants that are great for kids to take advantage of if they don't have the money themselves and they have a parent that either doesn't have it or isn't willing to help them in that way.

Those can be, I think, I'll have to double check on that actually, but I think those can be used in conjunction with each other. So even if the person doesn't qualify, for sure the lower down payment. So you could do three and a half percent FHA loan and a 5% loan for conventional. And I'm not a, you know, mortgage expert, but there are different factors for qualifying for those loans.

There's different percentage, rates on the loan, depending on what program you have. I think it's really important for parents to consider helping their kids get into real estate as soon as possible because we're in a time where it is hard.  Prices are not likely to drop dramatically.

We're on, even if we kind of, you know, go up and down a little bit in price, we are not on a trajectory that has any indication of coming down. It's either a steady kind of arc up, sometimes a sharp. We saw a huge sharp, increase in appreciation during the pandemic. The sooner you, can get into the game with real estate, the better off you are.

Somebody recently on the podcast mentioned it's like compound interest. The sooner you get started, the more beneficial it is because over time, with compound interest, you're just keep building the it, it's time. And we say that a lot too, like it's not timing the market, it's time in the market that really matters the most.

For people that are either concerned that their kids may not be able to afford getting into a house, I think even taking equity out of your own home to help your kids is a really smart idea.

So this place that we were looking at, that place will go up in value because even that place sold for a lot less previously. It's a cute little apartment in a horseshoe shaped apartment complex. A Melrose Place thing. 

Yeah, that's, 

yeah. And young people will not get that reference. Sorry. 

Yeah. It is an attached wall unit, so those tend to not go up in value as quickly as a single family detached home. And they do most of the time have HOAs, which is an added expense when you're looking at qualifying for the loan. So on your debt to income ratio, that, HOA monthly fee is part of the debt that you're having to cover, when you qualify.

There's some upsides and there's some downsides. I think in this particular unit where that we're kind of talking about as a case study to a certain extent. It's right next to a historic neighborhood. It's a neighborhood that was established in the early 19 hundreds.

There's a lot of historic data showing that it has, created as a desirable neighborhood and has maintained that for over a century. I think looking at that kind of data would, to me indicate that, yes, it, it will likely go up in value even if it doesn't go up as quickly as a single family home.

The other thing to consider as you're looking at it, you know, potentially, and I think in your case you're looking at it as it's a way to get our son into his own place. 'cause he can be on the title, which is amazing and helps him establish credit in that way.

I think the other thing to really look at is if you're thinking of that as a stepping stone to building a real estate portfolio, you also have to consider rents in the area, they've always increased.

And this is my point is even if you didn't have a gigantic increase from appreciation, an increase in equity, there's a very good chance that over time that would be a very high cash flowing rental property because we have historical data that shows that rents also have steadily gone up.

So even if you stayed at sort of the same value on the property and rents go up. That also helps you in the long run, once you are no longer occupying it and you turn it into a rental. Another factor that, I should bring up, is if you're looking at, well, any property, and this is your strategy, is that you 

want 

to get your child into a home, have them live in it for a while, and when they're ready to vacate the property and maybe they get a job somewhere else or they just want to get into a bigger or better property, you really want to make sure that the property that you're buying has the capability. 

It can be a rental down the road, and especially with HOAs and attached units. A lot of times they do have rental restrictions, so you wanna make sure that you know what those are and that they fit with the finance.  Like your, spreadsheet of, is this going to work as a rental property down the road?

Sometimes there will be rental caps in those types of property, which say, only a certain percentage of properties can be rental properties. If that's the case, you wanna know at the time, if they say there's a 50% rental cap or then you wanna find out from the HOA how many units are currently rentals.

And if they're at that cap, then, that's not necessarily a deal breaker, but you'd wanna do a little bit more research into what's the turnover? How often do those rentals become available? It becomes an owner occupied versus a rental. And see if that works with your anticipated timeline of turning the property into a rental.

The other thing that is super common is a restriction on how long of a rental you can have. Sometimes you can only do rentals that are 30 days plus. Sometimes it's 90 days plus, sometimes it's a year. And those are all just things that you need to know to make an educated decision about whether or not this property is going to fit with your goals.

 Also thinking in terms of sometimes things happen that are out of our control, and you wanna make sure that that the use of the property is going to work with your goals. Should something come up. I'll use, and I think it's really common for, younger adults to like, get a job someplace else, or they have a significant other that moves away and they wanna move with them.

Those kinds of things can take them out of a property unexpectedly sooner than maybe you were anticipating. So you wanna make sure that if something like that were to happen, does this property still make sense for us? 

When we looked at the listing, you were the one who helped point out to me that, there were no, I below 90 day rentals. Yes. So that means don't, you can't Airbnb it. And I understood that. And then you just brought up something interesting the rental caps. So for instance, this little u this little complex had 10 units in it. So when you're talking about a rental cap, that's something that you have to discuss with the HOA to find out.

Yes. How many, okay. 

So we would, if they 

have one, they may not even have one. Not all do. 

Okay. But 

that's something that you wanna know. If one, if they have one and two, what it is, and three, how much like are they at the cap? Below the cap? And that can change, you know, you could, you, you could buy a place and they could say, oh yeah, we have a, 50% rental cap, 50% of the units can be rented and the others have to be owner occupied.

And they could say, we're only at 25%. That could change tomorrow. So it, it's like more trying to gather the information and then doing the best you can with it, but at least, you know. 

And so you would gather the information from the HOA mm-hmm. That you're looking at. Okay. 

Yeah. And then the other thing, and this is more of a finance, piece that I won't go into, but those, so there's like the HOA rental cap, and then for financing, there can be restrictions on how many units can be rental properties for lenders.

So, that can come into play when you buy the property. And it can also come into play when you go to sell it, if that's something. And that's just for these HOA. Usually attached wall properties. 

So it pays to have somebody who knows what's happening, because I would never know to ask these questions 

a hundred percent.

And since we're talking about it, one of the things that I always, always, always recommend is hiring a professional to do an HOA document review. If you have an HOA of any sort, it's about, I don't know, six or $700. Which is expensive. It's like having another exp inspection and you wanna do that.

There's, when you're buying a condo or you know, something with an HOA, there's a section on the sale agreement that speaks to that. But I always recommend having a neutral third party expert take a look at those because. I can look at it, you can look at it, but having somebody with legal experience, taking a look at it because it's, it's, and it's not just legal, it's also, looking at who, who is managing the HOA?

Is it the owners? Do they have a management company? It's looking at their reserves. You're paying an HOA monthly fee. How much of that are they setting aside for future repairs? Because any building is gonna have future repairs, whether it's a single family or, shared HOA. So you wanna look at that.

You wanna look at how often are they meeting to discuss these things? Are they doing assessments, of the building to anticipate repairs for the roof, the siding, anything that the HOA is covering. And a lot of that information can be in HOA minutes if it's, you know, meeting minutes. If it's a well run, HOA. I will say, not very many HOAs are well run.

Then you just have to assess what your risk tolerance is and comfort level is with what is with the HOA. But having a professional look it over, I feel like is invaluable and money well spent. The other thing that can come up, in the, when you're reviewing the HOA meeting minutes is what's called a special assessment.

So for HOAs that haven't been, for whatever reason well run, or, they just didn't start putting money into reserves and then all of a sudden they're like, oh my gosh, we, unit three has a leak in the roof and it turns out the whole roof needs to be replaced and we only have $5,000 in our reserves.

Then they take that and if it's, it's something like a roof, it's usually on something like that, it could be a hundred thousand dollars or more depending on the size of the, the roof, obviously. And then they'll just d divvy up the bill and everybody now has a special assessment that, and there's different ways we don't need to go into that, that far down the bunny trail.

But what you do wanna know is if there are any talks about a special assessment because you don't wanna be the one that buys it and then gets slammed with a special assessment shortly thereafter. 

These are all great points to make and something I had never even thought about, looking at the HOA history and even their financials just to ensure that I'm walking into an organized place.

Yeah. There's also, there are bylaws that there can be restrictions on pets. There can be restrictions on one if you can have pets. Two, if they do allow pets, what kind of pets are allowed, how big. Sometimes they have, restrictions on you can have a dog, you have one dog, but it can't be over 45 pounds

So those are all just things that you wanna know going into it so that you go in with your eyes wide open versus getting blindsided. 

Great. So let's pretend that we move forward with something like this. How, how does that look? What does that look like? 

The purchase is pretty similar.

So if you were to move forward the first step, honestly, like we went and looked at the property, just like I always do. If you said, Hey, we wanna write an offer on this, I would say, let me talk to the listing agent and find out what they're looking for in an offer. That is to give us the best chance of writing an offer that will be accepted.

And going back to what I mentioned earlier about everybody has different tools in their toolbox. Maybe the seller wants something that you either can't provide for them. Like I have a, a condo right now that I have under contract for, some really sweet clients and they really wanted to have a 60 day closing on the condo because they're following this idea of they purchased a condo like five or six years ago.

Now they're outgrowing that and they want to start building their real estate portfolio and a condo in their same HOA became available. But in order for them to qualify for it, they need to have a signed lease agreement for the condo that they're vacating. And so they're traveling and they have a lot of life stuff going on, so they wanted a 60 day close, which wasn't ideal for the seller, but we were able to negotiate.

By having them increase their earnest money. And, they're actually, which is not ideal, but it got them what they needed, which is really the goal. So they're releasing some earnest money 30 days in, because from the seller standpoint, when you're in summer, you take a, a property off the market and you don't know for sure if it's gonna close. We generally have a pretty good idea, but it's like, it's not over until it's all officially closed.

So if you take your condo off the market for two months in the prime peak season, and then if for some reason it came back on, that's not ideal for the seller. So all of that to say, what we do is we ask the listing agent what the seller is looking for in, an offer.

I always ask if there's an, any other offers on the table or if they've heard of any others coming in. And then I take that information to you based on what you want, you know, what you can do. And when I say you, I mean you and your son. Then we craft an offer that hopefully checks as many of your boxes as possible and as many of the seller's boxes as possible.

I would at that point assume that you have pre-approval from a lender. We usually want that in place. Sometimes there's not a whole lot of programs that a buyer will qualify for, so you're like, and sometimes there's multiple.

So then you can use whatever program you qualify for that meets your needs the best, and also meets the seller's needs the best. And then we just submit the offer and it's pretty normal. After that, we would once the offer's accepted and everybody is, under contract, then we proceed with inspections and going through the, jumping through the hoops of the, the lender.

I should mention, too, that I have not yet done this, but something that I am in the process of learning more about is seller financing as an option. Which I, I. I'm super excited about because I feel like it has the potential to open up so much more possibility for all scenarios. It's a way that, and what seller financing is, is it's pretty much what it sounds like.

You, rather than going through the bank to get a loan or credit union or you know, whatever, the seller becomes the bank and they're the ones that you negotiate and come to terms with. And then, then you pay them directly versus paying a Mortgage company. And the reason I'm excited about that is because there's a lot of ways that you can negotiate.

There's been so much talk for years about interest rate. Well, you can negotiate an interest rate with a seller. You can negotiate how much down. You don't have to fit in this box that lenders have, based on data they've collected. Like, okay, these are the people that fit into the, these parameters.

They're the least likely to default on a loan. So we want them in this box because nobody wants somebody defaulting with seller financing. There's still hoops to jump through to make assurances, you know, to the seller that the buyer is well qualified, that they're not going to default, that the seller's covered if for some reason the the buyer defaults.

But, you can structure it, for example, where you're saying, you know what, my son, you know, I'm gonna co-sign on this. In your case, you could even say, look, we own this other property outright, you. There's ways that you can leverage that by putting notes onto attached to that property, even though, the default would be on, on this property if it ever happened.

To me, it's like super exciting because there's, maybe you say, okay, he's, he's a young adult, he's just finishing college. We wanna pay interest only for five years. And, you know, that's gonna be significantly less. It's usually a lot less in closing costs because you're not paying the lender, for the loan origination.

So that's just something else that as I learn more about that I will share more, but I'm, I'm really, really excited about using that to help people get into real estate. 

So this is another one of those toolboxes that you're talking about? 

Yes, absolutely. And it's not super common. I mean, there's not a lot of realtors that I think a lot of realtors shy away from seller financing because there's, it's kind of interesting.

There's a whole talk, the person I'm learning about seller financing from is Mel Dorman. She has an amazing Ted Talk, that we can link in the show notes. But, she really kind of deconstructs like, we've been taught that the safe way to get a mortgage is with a bank.

But then she talks about this whole idea of it used to be that a neighbor would make a deal with a neighbor and they just came to terms themselves. well, yeah, why can't we, why can't we do that? That keeps the money in our community where as opposed to going to a bank which ends up on Wall Street. I just think there's a lot of rethinking how we think about financing and real estate transactions.

And the seller financing is something that I'm really excited about because I think there is a potential for getting young people that are worried about maybe never being able to own a home. There's a possibility to use that to help them. When you think about some of the terms that banks require one of them is usually a W2 job or two years of history.

Tax returns, if you're self-employed. And let's be honest, if you're starting a business, you're trying, you're trying to show that you're not making a lot of money on paper for tax purposes. So then you're in this dilemma of how do I qualify? I think it's really exciting from the standpoint of helping people that want to build a real estate portfolio that maybe they don't fit into the box of lenders.

 Isn't this how property was sold historically? Way, way, way, way back. 

Yeah. It was 

just between the seller and the buyer and the buffers of banks and lawyers and agents

yes, a long time ago we did just deal with each other, on stuff like this.

I didn't know why we stopped dealing with just the buyer and the seller. Is it Because we started moving across the country, then people didn't know each other, and so then you had to involve bankers and lawyers and everything else. 

Yeah. Yeah. I think that that is part of it. I don't know specifically.

If you think about in today's world, most people, if they're selling a home and buying another home, they need that, all of that equity out of the first home to buy the second home. So there's no way for you to kind of have your cake and eat it too.

So if you were the seller, on a transaction like that, you can't hold the note because you need that money for your next purchase. So banks, you're looking come in and fill a gap that way. 

Okay. So what you're looking for are sellers who are able to carry the loan. 

Yes, a hundred percent.

Like they're sell, they're selling a second piece of property, or they're selling something that they aren't really using. 

I think, I mean, those are possible scenarios. I think, going back to what I said earlier about time in the market, it's usually going to be people that have owned a property for a long time and, for whatever reason, they wanna get rid of it.

In Mel's course, she talks about tired landlords. They don't wanna deal with, rental properties anymore. We should do a whole other like podcast on this. But, and I actually really wanna get Mel on the show, but, when you start diving into it, it's, it can be really beneficial for the seller from the standpoint of let's say you own a property outright and you're kind of heading into your golden years, but you're not, you're not like on your way out or anything like that as far as, you know .

Think about when you sign a loan document, I always tell people like, don't even look at the amortization schedule because you'll be sick to your stomach to see how much you're paying in interest. Right? Like, it's a lot of money. Even at a low interest rate, it's a lot of money.

So if you look at that from a seller's perspective. They might be like, oh, I could make another $250,000 on this property into my pocket versus the banks and I don't need that money right away.

There's people that maybe, maybe they don't have a hundred percent confidence in their heirs and they're like, I don't want them to have a million dollars sitting there ready for them to use.

I'd rather have them have this contract between me and the new buyer, and then they get, $2,000 a month and at some point there will be a balloon payment most likely. There's all different ways to use seller financing. It can also be a way for a seller to not pay a whole bunch in capital gains right away.

There's just a, there's a lot of, benefits for both buyers and sellers and I think it's exciting.

That sounds very interesting, and I think you should do another podcast on that. 

So I know I really wanna get Mel on the show too. 

Let's continue with the, the what ifs of, of buying that place with our son. And we've talked about, making sure that you have a toolbox that handles the HOA. You would of course do home inspection and that sort of thing.

What other things would you look out for if you are moving forward with buying your college kid a place I. 

I mean, this might seem kind of obvious, but I would one, make sure that this is, this is also their dream, not just your 

right 

dream. I definitely think that they need to have a buy-in.

Not, not financially, but like they're on board with doing this. I would have an honest conversation with them about where do they see themselves in three to five years, so that you can plan. In that conversation, if I were to have that with my kids, it would be like, this isn't set in stone.

 I completely understand if something comes up and you need to vacate this property. In order to make this decision about if this is gonna be a good move for you and for us as a family, let's have an honest conversation about that so that we can make the best decision possible with the information that we have right now.

I would also have a conversation with them and I would find out do you want, is this something that you want? And part of that conversation might be more in depth about helping them understand the true benefit.

And I can say from myself, if somebody had one, been willing and able to help me get into a property at a younger  age and two, they really mapped out for me, like, don't just think about this in the here and the now and the, you know, potential headache of owning a rental property. Like, look at what this could do for you, for your future, and at least factor that into your decision about if you want this for yourself.

And I would also really, really, this would be almost a non-negotiable, I think for me is when you're looking at your numbers. So, you'll have your mortgage payment, which will likely include taxes, insurance, and that HOA fee. And then I would include a property management fee of eight to 10% when I'm looking at those numbers.

And maybe that doesn't come into play on day one if your kid is actually moving into the property, but I don't wanna manage their property. They probably don't wanna manage it. So let's just look at that cost upfront and factor that in. And if you factor that into your numbers and everybody's like, yeah, that's, it's still makes sense, then you should be good to go.

These might seem super obvious, but like can you see yourself living here? Is this a location that you wanna be in? Is this the type of home you wanna be in? Do you wanna have roommates? Do you not wanna have roommates? I think those are the big things that I would take into consideration.

They seem like obvious things, but you're right. It is conversations that you do need to have with your kids. And it makes me think about, your previous guest, Austin Wengal Brown, who the best relational self who talked about how to have these conversations. Mm-hmm. That you need to have these direct conversations and not put your stuff or wants into what your child is, is wanting or needing to do. 

Right? 

Yeah. 

Yeah. And in order to do that, I think you really have to have an understanding yourself of why this is a good idea, you know, for them. Yeah. I tend to think in terms of real estate investing, obviously, but we're talking about one condo for one kid.

Maybe you're helping a young adult get into a house and they're just like, I just want this house and, I don't care about building a real estate portfolio right now. And then you just have to look at those numbers and again. It's always, it's just like in a business when you have a business partnership, it's like, what's your exit strategy?

Everybody's so much better off having that conversation upfront and trying as best you can to anticipate the unexpected. So walking through scenarios of like, okay, so we help you get into this house, what happens if you don't wanna be a landlord and you need to move in, you know, a couple of years?

And let's say the market's been kind of flat and we haven't had a whole bunch of increase in equity. What does that look like? The kid is buying it and it's in their name and it's their property, then these, these become their decisions, right?

Yeah. 

You get to advise them, but they're ultimately their decisions. And I think actually that's a really good thing to think about because I've seen it happen quite a bit actually, where parents love the idea of helping their kids and they do it with strings attached. That is not something that I would ever advise.

Honestly. I think if you're going to offer up your self as a co-signer, if you're going to offer up gift money for them to have a down payment I think when I say strings attached, I do think you can have an agreement with them. You need to pay this much of the mortgage if you're helping them with that, those types of things.

 But you need to be super clear about what happens down the road with as many different situations that could come up.

I would personally say, we'll help you with this. We've done this with our kids, with their cars, we'll help you get into it, but then you need to maintain it.

And, that's another thing. Who's going to maintain the property. And does your kid have the skills and the time to maintain the property? Are you going to have expectations around how they maintain it? How involved are you going to be in this property?

The last thing you wanna do as a parent, I would think, is get into a situation where you are really wanting to help your kid and then it turns into a sore point in your relationship. Like, no thanks. I don't want that. So having those conversations all the way around and having the hard conversations about what ifs.

I like the idea along with discussing the actual purchase and how the participation of that is that you also want an exit strategy. That is something I'd never would've thought of. 

Yeah, and all of this stuff. I will say if, if anybody is listening and they're considering doing this with and or for their child, I'm happy to sit down and discuss with them and their kid, what some of these things can look like.

And sometimes it's easier to have a third party present for those conversations. 

This is why they say real estate agents are also marriage, c therapists, marriage counselors, therapists, the whole bit. Yeah, I understand that now.

do you have any additional conversation or, not conversations, but questions for me that I might not have thought to bring up? 

I think you covered everything. Like that whole exit strategy thing, I never, that would never have crossed my mind.

There's a lot of important points on this. Have someone on your side , a great realtor who helps you with whatever it is that you've got going on. You also need toolboxes. People who look at the HOA, people who can look at if it's a available through seller financing, people who look at how can you use this piece of property once that child is gone or if it's u usable at all.

And the, the exit strategy was a big part of that. It's something to consider before you even jump in. 

All of those things factor into the number crunching part of it when you decide if this is gonna be a good option.

Parting words would be I maybe like a year or so ago, sat down and figured out for myself, like how much money my parents helped me with with college. The long story short is I figured out and I went back and looked at like, at that time what was an average price for a home in the area, how much did it appreciate in the four year, like the four years that I was in college.

And in a nutshell, what I found, I was hopeful that this is what I would find, but I was surprised that I did is. If in fact my parents had given me the money and not used that to help me pay for college, which I'm super grateful that my parents helped me as much as they did, but I also, they did not pay for college.

Like I had a lot of student loan debt when I graduated. What I found is if even the amount that they had given me for those four years of going to school, if I had been able to take that money and buy a home, an average priced home, I didn't even factor in that I could have probably had roommates helping pay for that mortgage, which would've been more money in our pocket.

What I found is that I could have ended up with the house. The equity from that house, based on the appreciation over time, that house would've then paid for the student loans, like paid them outright.

I don't know that that's the case for everyone, but I think it's worth looking into and considering. There's something I think for people that feels a little scary, it's outta the box. It's not the norm. And so it feels risky to do something like that. Be like, Nope, sorry, I'm not gonna pay for your school. What I am gonna do is put that money into an appreciating asset, and then that will pay for school.

I have one in college and another one heading into college. I will say also full disclosure, I have had this conversations with the one that is in college and she's just not ready to be the homeowner. She's not ready to have that. Like we've had that conversation and she loves the idea of it. But I think for her, there, there's some uncertainty about, how long am I gonna be in the, the town that I'm going to school in? It's close enough to us that if, if. We did have a property there, it wouldn't be terrible to manage it. We would obviously have a property manager if she wasn't living in it.

And worst case scenario, if something really needed our attention, it's a two hour drive. So I see benefits of doing that, but I'm not gonna do that without the buy-in of my kid, even though I feel like it's a way smarter use of money.

 You did have a guest whose son was graduating from high school, but he had joined the National Guard. 

Yeah. Dawn Maynard,

the GI Bill would help pay for his school and so he asked his parents to give him college money, which he would invest in real estate because the GI Bill would help pay for his tuition. I thought that was genius. And I guess that's the whole, the buy-in part of it. Yeah. This kid was a hundred percent buy-in. 

It was his idea. 

It was his idea. Wow. Yeah. Okay. Now that's something else entirely. Whereas, most kids, and I say kids are over the age of 18, but really they're, they still our kids where they're just not thinking that far ahead.

And that's understandable, but once they graduate college, they'll start thinking about it. 

In that particular instance, and I think this is really valuable information for parents. Dawn's son had that idea and presented it as an option to his parents because he had grown up in a family that made money developing real estate. All of that to say you can do a lot of good for your kids by modeling this for them, by being an investor yourself. I can say personally, my kids know a lot about real estate investing from the short period of time that we've been investing in real estate and they've seen how that has impacted our lives currently.   consider it a relatively short period of time  

They get how it will impact it down the road and they all, it's not all just the benefit. They see the hard work and they see, that there is a building phase of it. And I, I hope I always have the kind of relationship with my kids that they also then get to see, down the road, how smart it was for us to do what we did and that we're doing it for them, and that they understand how they can take the torch from us.

And this is like something that can be the gift that keeps on giving. But you have to have the knowledge yourself. You have to put it into action and model this for them and, and teach them also.

That's a perfect way to end this.

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