Intergenerational Wealth & Real Estate: Uncovering the Secret of Long-Term Wealth
In today’s world, the concept of intergenerational wealth is gaining attention as more and more people recognize the benefits of a family wealth legacy. Real estate is one of the best ways to build intergenerational wealth due to its potential for long-term capital appreciation and low volatility. In this article, we'll explore the concept of intergenerational wealth and its benefits, how to build it through real estate, and strategies for getting started!
What is Intergenerational Wealth?
Intergenerational wealth is a term used to describe the transfer of wealth from one generation to the next. This type of wealth can be in the form of investments, cash, and other assets, like real estate. Effective intergenerational wealth planning means that you, the originator of the fortune, will not only be able to live securely and pursue the life you want, but your children and grandchildren will also. That is a legacy worth pursuing! You can see why people find the intergenerational wealth concept so appealing (if you didn't already). Still trying to understand why intergenerational wealth is essential? We provide a summary o the benefits below, so read on!
Benefits of Intergenerational Wealth
Ensuring intergenerational wealth passes on to descendants generates benefits that help build and maintain wealth for future generations. By passing on wealth from one generation to the next, families maintain current financial security while providing vital resources for future generations to build and maintain their own wealth and security.
Benefits of successful intergenerational wealth planning include:
- Long-term growth and preservation of wealth and assets
- Ensuring the security and advantage of future generations
- Establishing a legacy that descendants will appreciate
Learn more about the benefits of family wealth planning here.
Why Real Estate Is One of the Best Investments for Intergenerational Wealth Planning
Investing in real estate can help families build wealth and pass it on to future generations. Real estate assets come with unique advantages that other investment types don’t offer. If you’re interested in intergenerational wealth planning and looking for safe and profitable investment opportunities, here are factors in real estate’s favor worth considering:
- Real estate provides a steady stream of income. If you’re not personally using a property, rent it out and sit back while enjoying the steady additional income.
- Real estate investments reliably increase in value long term. Even if market prices dip and rise in the short-term, value still increases long-term.
- For the reasons above, real estate investments have lower risk/volatility than other types of investments.
- You can use real estate assets as collateral for other investments. If you need funding for a new business or other venture, real estate is a desirable form of collateral for banks, firms, and other financing institutions.
- Real estate offers diversification opportunities to spread risk and ensure the wealth remains with the family. You can invest in residential, commercial, or industrial properties. There are also passive real estate investment opportunities, including private real estate funds and traded REITs (real estate investment trusts).
For these reasons, real estate investments are among the top opportunities to build wealth over the long term and pass it on to future generations.
Next Steps Towards Building Intergenerational Wealth Through Real Estate
Building intergenerational wealth through real estate can be a daunting task, but there are some achievable steps to help you get started:
- The first step to building intergenerational wealth through real estate is to create a rough investment plan (or outline, if you will). This outline should include detailed research into the real estate market, short- and long-term goals, and identifying real estate investment types that will help you reach those goals. The investment plan should also include who you want to pass your assets on to and how you’ll facilitate the intergenerational wealth transfer (more details on this in a future post!).
- Once you’ve completed your investment plan/outline, schedule a consultation with a real estate agent or financial advisor. An expert review will help proactively address potential issues with your plan while boosting your confidence that you haven’t missed anything vital.
- Now that you have a firm investment plan, it’s time to start investing! Focus on investing in properties with long-term potential for capital appreciation and rental income opportunities. Also, keep an eye out for ways to diversify your real estate investment portfolio to spread out risks and protect investments in the long run.
Using these strategies, you will ensure that your investments generate a steady stream of income and wealth is preserved and passed on to future generations.
Searching for Real Estate Investment Opportunities?
If you are interested in using real estate investments to build intergenerational wealth, contact Leslie Davis and The Key Performance Team! Along with providing real estate agency services, our team can help develop real estate investment plans, identify properties with significant investment potential, and ensure you build your wealth legacy to last for generations.