Thank you to all of you who requested this video! The following is written as a continuation of the video above so I recommend watching it first before reading to better understand my explanation.
I recently had a conversation with a family member about co-signing for our children when investing in real estate rental properties. Her main concern was, “What if it went badly?” I completely understand this concern and concluded correctly that she meant, “What if he/she stops paying the mortgage? What if he/she simply stops caring for the property? What if the child runs out on you?” These are all valid concerns with very simple answers. But first … 😁
TRUST & RESPONSIBILITY
When working a minimum wage job or near that amount, it takes long hours and a lot of hard work to accumulate the $10,000.00 for the down payment. This is a huge responsibility and saving that amount shows you and them that they are careful with their money, that they can be trusted with handling large sums and that they are serious about tackling larger financial endeavors. If for some reason it doesn’t work out as planned, there are options for the parent who co-signs and both are a win-win situation.
WHAT IF IT DOESN’T WORK?
So let’s imagine the worst has happened and your child decides he/she no longer wants anything to do with the rental property. As the co-signer and hence co-owner, you can choose to either keep the property and continue making a monthly profit OR sell it and still make a profit. Either way, the rental property will allow you to continue making money. But at the same time, I also think parents have a good idea in general of the type of person their 18-year-old has turned out to be and know if they think their son/daughter are responsible enough for this endeavor.
OTHER INVESTMENT OPTIONS
But if the idea of co-signing on an investment property with your 18-year-old is still not something you want to do, there is also the option of waiting two to three more years so that they can build their own credit and attempt this undertaking on their own. Whichever way they choose to invest, will benefit them in the long run by building their savings, building their credit all while earning a passive income.
WHAT ABOUT COLLEGE?
Investing and college can work together! Even if parents are paying for their adult children’s college tuition, their children can STILL invest. In today’s society it’s ingrained in every family with children that they HAVE to go to college. Why encourage our children to immediately begin their adult life in debt by pulling out student loans (if they’re parents aren’t paying for it), rather than in earning investment income first or at the same time? The most common objection to the idea of investing at 18-years-old is fear and a lot of, “What ifs?” However, the idea of being $50k to $100k in debt at only 20-years-old would be the bigger fear for me. 😁
I hope you found this helpful and thank you for watching!
The following are a list of resources that we used and still use for our investment journey.
- Bigger Pockets – FREE investment videos & podcasts
- Rich Dad Poor Dad by Robert Kiyosaki
- The Book On Rental Property Investing by Brandon Turner
- The Millionaire Real Estate Investor by Gary Keller