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  • Marc Halpern, Part Time Investors LLC

4 Ideas to Teach Your Adult Children About Real Estate Investing


Those of us who have achieved a significant measure of financial security from real estate investing are often eager to pass on our wisdom to our children, especially our adult children, so they too can enjoy the benefits of being self-sufficient and avoid being solely at the mercy of employers and others.

While every situation is different, I would like to share four things I did with my adult children to encourage them to learn and engage in real estate investing.

First, I would like to point out that there appears to be a cycle of influence you may have with your children as they mature. Mark Twain famously said "When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years."

In the first couple of years of your kids’ lives, you have some control over their thoughts and actions. As they progress into pre-teen and teenage stages, most of us parents lose all traces of control and the best we can hope for is influence over their thoughts and actions. When your kids morph into adult children with their own full responsibility over their lives and future, many of them proactively seek your advice again. That is a most opportune time to exert influence again. However, you can always subtly and continuously program your kids at all ages for success. I recommend that you read about neurolinguistic programming (NLP), even though it has been discredited scientifically from a purely theoretical standpoint. This recommendation is based on some of the practical concepts that I believe can help program your kids and also help program your tenants for compliance or at least identify which tenant candidates are more likely to be compliant and open to suggestion (watch this video in the Smarter Investing home study course).

1. Modeling

The first and most obvious action I took to help my children be exposed to the benefits and activities associated with real estate investing is modeling. Modeling is how kids learn most things. My wife and I have always mentored and helped other people (like our parents did), so it not surprising that our older son became an Eagle Scout/Big Brother/Habitat for Humanity volunteer while our other son served in the Peace Corps and works with homeless children, gangs and other disadvantaged populations. We never told them to volunteer. We didn’t have to. The same applies to occupational security and real estate investing.

My kids grew up watching that two solid occupations provide financial well-being without driving oneself crazy while at the same time part-time investing is a natural and normal activity that results in additional financial security and even serves as career insurance.

I started to be a serious part-time real estate investor (as opposed to just a generic part-time investor) when my kids were teenagers. That also taught them through modeling that it is natural to change, more accurately add, additional occupations at any stage of life. This too is an important lesson. Maybe some of you still need to learn this lesson. My kids saw this as natural.

I also shared with my children the decision making thought processes I used when I first became a serious business owner when they were in their pre-teen years. I exposed my kids to independent thinking that was very results-oriented while implementing the unwavering principles of ethical and legal compliance in everything I do.

Modeling is a powerful way to teach younger children about real estate investing but it also works for adult children, though they have to be motivated to improve their lives or else none of these recommendations will work.

2. Real Estate Investing Bootcamps

The second most obvious action I took was a no-brainer and that was to take my younger son to a 3-day real estate investing bootcamp when he was in high school. This was back in the days when bootcamps cost $3,500 plus travel expenses. As veteran investors already know, the return on investment on training is rarely less than 1,000%.

While it is hard to precisely quantify the exclusive impact of that single bootcamp, surely it exceeded a couple hundred thousand dollars in the first few years. So, the ROI for me alone was several thousand percent. On top of that, my son learned all about acquisition and management of rental real estate and lease-option. Today, my younger son is a teacher and plans to use his summers to buy-fix-sell and/or buy-fix-rent houses in the beautiful college town in Montana where he lives.

Even if you have adult children who live far away, co-attending a real estate bootcamp is a great way to learn and reinforce the strong family bond while providing the tools for your kids’ strong financial future.

3. Joint Flip

Shortly after my older son got married, the happy couple sought my counsel on financial matters. I put together a PowerPoint presentation on things I learned in 30 years about financial management (which I will one day clean up and add to my Smarter Investing home study course) and I asked them to join me on a flip.

We bought an REO in the name of all three of us, secured the construction loan in the name of all three of us, split the project management between the three of us and split the profit between the three of us. It was a $70k rehab and my son and daughter-in-law learned more than I could have ever taught them without this experience.

This buy-fix-sell project was feasible because my son and his bride lived within an hour of the project, so this activity works when your adult children live within driving distance of both you and the project.

Here is another perspective to think about. I shelled out a total of a quarter of a million dollars of after-tax money on my kids’ education at University of Maryland and Temple University. It took us more than a decade and a half to accumulate and earmark this sum of money for this purpose. I remember paying $1,700 for an elective course my older son took on the history of rock and roll to meet his non-science credit requirements for his degree in chemistry. That is a boatload of money for something that has questionable return on investment at best. Doing one flip with your kids teaches them about construction, contractor management, how much things cost or should cost, how to secure financing, how to buy a house, how to sell a house, legal aspects, kitchen design and so much more.

When I compare the $1,700 I paid for my son to learn the history of rock and roll with the amount of money my son and daughter-in-law actually made in profit to learn so many useful skills, this is a no-brainer.

If you are a flipper, don’t just show your kids how you flip, consider making them a legal part of the deal when they are legal adults and assign them real tasks with real impact. My daughter-in-law designed the kitchen and added a wine rack to the cabinetry. I never would have thought of that.

A joint flip with your adult children is a great way to teach them about real estate.

4. Rent Instead of Sell When Moving to a Bigger House for Expanding Family

A few years after the flip, my older son and daughter-in-law were expecting their second child and their 2 bedroom 2-bath condo was not going to meet their needs anymore. The time came to move into a 3-bedroom house. The question then became what to do with the condo.

Since my son bought the condo in 2009 before he met his future wife and it was closer to the beginning of the real estate downturn than the end, his condo was upside down (more mortgage loan balance than value) when they needed to move. With a new child on the way, they didn’t want to dig into savings to pay off the loan, so I showed them what the numbers would be if they were to keep the condo as a rental, even at break-even cash flow.

When you do the numbers for converting your current home into a rental and if you have young children, it becomes obvious that the loan balance paydown alone over 15 years or so (not including cash flow or appreciation), is enough to pay for a substantial amount of college for one child, even accounting for major inflation of tuition by the time the child turns 18.

My kids have been building equity in their condo as a rental and will continue to build that equity over the next decade until my granddaughter goes to college (over $100,000 in loan paydown alone). In the meantime, the market has recovered, so the loan balance paydown plus appreciation has been very favorable. Of course, the market will fluctuate naturally, but the lesson is that holding their first house instead of selling it will probably pay for their first child’s college tuition or at least come close, depending on tax ramifications at that time.

Owning one middle income class single family home rental per child comes close to paying for one college tuition for that child if you sell and you don't mind giving up the cash flow when your kid goes to college.

There are other ways to teach your children, including adult children, about real estate investing. These are just four ideas.

If you twist my arm, I’ll give you a fifth way. Invest the money to buy the game Cash Flow 101 and play it with your kids, your relatives, your friends and all of their kids. I actually played the game with my daughter-in-law’s brother, mother and grandmother and they learned a lot. This game changed my entire outlook on real estate investing when I bought it in 2004. If you don’t know anything about this game, join your local Cash Flow 101 game group.

As a corollary to Idea #2 above, you will improve your financial performance in real estate investing by buying the 22-hour Smarter Investing home study course which you can listen to by steaming video on any device connected to the internet. If you have a long car trip with your kids, you can listen with them then discuss the concepts to achieve financial freedom without driving yourself crazy. This life concept is EXTREMELY important and not only do most people not tech this to their kids, most people are even aware of how to achieve financial freedom without driving yourself crazy.

In the end, our only lasting legacy is our kids and/or the people we mentor. It’s not how much wealth we amass, since that typically dissipates within 3 generations. Your kids and your mentees are your legacy…their values, their thought processes and the behaviors/decision making they pass on through modeling to their kids and mentees. Invest in their thought processes and you will create a lasting impact for generations.


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About Part Time Investors LLC

Marc Halpern started Part Time Investors LLC after being tired of the hype promoted by most real estate gurus. Marc presents valuable technical content with zero-hype in all of his presentations and blog posts, including the advantages AND disadvantages of every investment strategy discussed. Marc Halpern has a Ph.D. in organic chemistry and makes decisions based on in-depth due diligence. Marc achieved financial freedom through part time investing, excellent strategic planning, data analysis and a fiscally conservative approach.

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