Updated: Apr 4
IT’S NEVER TOO EARLY TO START INVESTING FOR YOUR CHILDREN!
As parents and guardians, we naturally want our kids to be in a better position than we were. So, what’s better than giving your kids the gift of OWNERSHIP even at an early age? Did you know that your child can be a property owner even at a young age? Yes, your Kidvestor can truly become a real estate investor! Although a child cannot legally be on title under the age of 18 (and it's also not a good idea to do so), they can be listed as a partner of an LLC of which the LLC owns property! (They can also become a beneficiary of a trust, in which the trust owns the property!) So, what are the steps?
1. Form a Limited Liability Company (LLC)
You can form an LLC by visiting your local Secretary of State office or by completing the steps online. Having an LLC helps protect your personal assets from liability.
2. Draft an Operating Agreement
This is a legal document that details the owners of the LLC, the percentage of ownership for each owner, how the business will be governed internally, and how it will function.
3. Include your child/children as a minority owner(s) of the LLC in the Operating Agreement.
As the parent you will be majority owner while giving a percentage of ownership to your child/children. This gives them ownership of the property without any decision-making power of the majority owner. Once they turn 18 (or depending on the age requirements of your state) you can assign your percentage of ownership to your child in order to make them a majority owner of the LLC .
4. Buy a property in the name of your LLC.
Now that you have your documentation in order, now it’s time to buy property! Once you have found an investment property that fits your family’s long term goals and provides the cashflow you desire, make sure you purchase the property in your LLC. If you aren’t sure where to start regarding purchasing your first or next investment property, you can start now by taking this Free Real Estate 101 class.
5. Hire professional help
You will want to seek out the advice of a local real estate attorney who can help you set up your entity correctly. If you are looking to place the property in a trust in lieu of an LLC, you will also need help specifically from an estate planning attorney. A financial advisor is also another beneficial individual to have on your team to ensure that you and your family are financially ready for this step!
As you look into building wealth for your family and children via real estate, you can educate your children in the process. Teaching kids and teens how to invest in real estate is a valuable life skill that can set them up for long-term financial success. Below are some additional tips on how to approach teaching real estate investment to your child, tween, and teen:
Start with the basics: Begin by explaining the concept of real estate investing and how it works. You can use simple examples, like buying a rental property or flipping a house, to help them understand the process.
Emphasize the benefits: Help kids and teens understand the benefits of investing in real estate, such as creating passive income, building equity, and diversifying their investment portfolio.
Focus on financial literacy: Teach them about the financial side of real estate investing, including cash flow, expenses, and calculating return on investment.
Use real-life examples: Share real-life examples of successful real estate investors and how they got started. You can also use case studies to illustrate different investment strategies and their outcomes.
Encourage them to start small: Encourage kids and teens to start small with their investments, perhaps by buying a rental property with a family member or friend.
Provide guidance and support: Be available to answer questions and provide guidance as they begin their real estate investing journey. Consider connecting them with a real estate agent or financial advisor who can offer additional expertise.
The best part is that even if you don't have experience, we can help! The KidVestors' real estate investing curriculum teaches students and beginners the fundamentals necessary to begin building their very own real estate investment portfolio.
Overall, teaching kids and teens about real estate investing requires patience, understanding, and a willingness to share your knowledge and experience. By starting with the basics and providing ongoing support, you can help them build a strong foundation for a successful financial future.
View all of our financial education resources for kids and teens here.
If your school or group is looking for a finance curriculum to teach your students about how to manage money, start here to learn more on how to bring KidVestors to your classrooms!
Parents, teach your kids money and make money conversations normal in your household by visiting here.