As a real estate investor, it’s crucial to set specific goals to guide your investments, especially when you have a family. Understanding and managing the main financial stressors like healthcare, education costs, and living expenses can significantly affect your financial stability and planning.
Healthcare can be a significant expense, and if you’re working just to qualify for subsidized healthcare, it might feel like you’re stuck in a rut. For retirees, keeping income below 400% of the Federal Poverty Limit can ensure eligibility for subsidized healthcare, but this isn’t a feasible option for everyone.
College tuition is another major concern. A practical approach to managing these costs includes starting at a community college, then transferring to a four-year state school, or considering trade schools. For younger children, starting a 529 savings plan early can also be beneficial.
However, the focus here is on managing living costs by investing in real estate. With the rise in living costs, owning a home has become increasingly challenging, especially for young adults who might end up living with their parents longer than expected. This dependency can delay their financial independence and career progression.
The real estate goal every family should consider is owning one mortgage-free property per child. This strategy not only secures a living arrangement for your children, reducing their future financial burden, but it also contributes to building your wealth. By the time your child grows up, ideally, you will have fully paid off the property, which could have also appreciated in value.
Here’s why this goal makes sense:
1. Wealth Building: Owning multiple properties allows you to accumulate wealth through semi-passive income and capital appreciation.
2. Strategic Planning: You have about 18 to 22 years to plan and execute this goal before your child graduates from college, which aligns well with mortgage timelines and property value appreciation.
3. Security: In uncertain times, having a paid-off property ensures your child has a safety net.
4. Legacy and Independence: This approach reduces the likelihood of becoming financially burdensome to your children in your later years.
5. Purpose and Motivation: Having children motivates many to better manage their finances and investments, aiming for a stable and secure future.
Ultimately, owning a property for each child not only helps in managing your family’s living costs but also secures your children’s future, providing them with options whether they choose to live there, manage it as a rental, or sell it. This strategy fosters financial independence and teaches valuable life and financial lessons.
