Pulling oneself up by one’s bootstraps is all well and good but making sure the next generation has at least some firm ground to stand on as they strive to reach their goals might be even better.
Even though it might seem like the biggest generational wealth has already been built and squandered by a handful of famous families, the truth is that every family can start building generational wealth right now. One of the most effective ways to do it is to invest in real estate.
Realtors would say it’s so, too. Dylan Suitor, a realtor who is behind many successful businesses, including Elevation Realty Network, puts generational-wealth building as one of the goals he likes to see in his clients.
“When it comes to investors,” he says, “we are looking for individuals and families looking to grow generational wealth and replace their active income with passive income.”
It’s this second part that Dylan Suitor is getting increasingly experienced in, having recently upgraded his already impressive business portfolio with a new real estate investment venture. So when realtors use the services they peddle, there has to be something there.
Real estate is an excellent asset for generational-wealth building for several important reasons. The fact that real estate can be a source of income is great, but it gets even better because the property owner can outsource most of the work that inevitably has to be done in caring for and maintaining the property. Because nothing is stopping the investor from spreading their portfolio across several properties, this can easily turn into several streams of passive income.
There are other types of investments that provide passive income that are also completely managed by professionals. However, one of the key traits an asset needs to be effective at building generational wealth is a lack of liquidity.
According to a study by Keller Williams Realty, 70% of families lose their wealth by the second generation, so it makes sense to keep the wealth—or at least some of it—in the form of an asset that’s not that easy to sell.
Real estate might be harder to sell than stocks, for example, but it’s not that hard to transfer. With legal and financial structures that can be put in place in the form of trust, it’s incredibly easy to facilitate the passage of wealth from one generation to another.
Finally, there has to be some word about the way real estate generates wealth in general. Besides providing a stream of income through renting, real estate itself will increase in value through appreciation.
Next, there might be tax incentives and regulations that lessen the tax burden on owning real estate. When in a bind, investors can use real estate as leverage without relinquishing ownership over it, and it’s also possible to increase its value through forced equity.
Real estate is a great wealth-building asset for several reasons, and some of them also make it a great tool for building generational wealth. For Dylan Suitor, it’s also a way to have more freedom in line thanks to real estate’s ability to generate a passive income.