This key could be the actual metal object you use to unlock a door, or it could be valuable information or a solution, but the purpose remains the same: keys give you access.
As REALTORS®, we have keys like information, resources and solutions that give others access to homeownership and real estate investing.
According to a recent poll by the analytics firm Gallup, Americans rated real estate as the best long-term investment eight years in a row. Real estate is typically considered a stable and secure asset that can grow in value overtime (according to www.keepingcurrentmatters.com). When done strategically, real estate investing offers limitless opportunities to build wealth and create a legacy that can be passed down generationally.
Building generational wealth through homeownership is significant within the Black community, where nearly 60% of wealth comes from home equity, according to the Urban Institute’s 2020 Closing the Gaps: Building Black Wealth through Homeownership Report. Yet the rate of Black homeownership, which is in the fortieth percentile, and wealth is still the lowest compared to all other races in the United States. Discriminatory practices such as redlining have negatively impacted and lowered the rate of homeownership in Black and brown communities. Though redlining is now illegal, research from the National Association of Real Estate Brokers’ (NAREB) 2021 State of Housing in Black America Report shows that Black Americans still tend to pay higher fees and rates for mortgage loans and are more likely to be denied loans than other applicants. This systemic racism continues to economically oppress the Black community because it creates barriers to homeownership and generational wealth for current generations to pass down.
Who has the keys? We do. As REALTORS®, we have the keys to unlock a plan of action to prepare many generations to build wealth through real estate. To do so, we must be intentional about equipping all generations to become tomorrow’s homeowners and investors.
Exposure to real estate, especially in youth, can help develop an ownership mindset early on. I’m a great example of this: watching my parents invest and manage several properties when I was younger and helping with the family business made the biggest impact in my real estate career, where I’m now an investor and brokerage owner. I envisioned myself as a property owner before I became one thanks to this exposure. Regardless of age, this shift in mentality can both empower and prepare an entire family to obtain and maintain wealth through real estate generationally.
Here are six implementable keys to building and preserving generational wealth through real estate:
1. Write out family real estate goals.
Goals are important to help you create a roadmap to success. Goals should be SMART: specific, measurable, achievable, realistic and timely. For each goal, write a detailed plan of action to achieve it, including the resources needed and the timeframe to complete it. The entire family should be involved with the goal-setting process, to ensure everyone is on the same page. It is also important to create roles and responsibilities for everyone to help implement the goals and monitor progress. Be sure to always include financial goals, as this is a key part of the ability to acquire and manage property. Goals may change over time, which is okay, but it’s important to start somewhere
2. Create and speak daily affirmations.
Talk to your clients and encourage them to create real estate-related affirmations to declare daily. Our words have power to manifest our realities. No matter how we feel, it is important to not allow fear to stop us by speaking positive words over current and future circumstances. To be intentional, connect the affirmations to the family’s real estate goals. For example, if the goal is to build generational wealth through real estate, then we declare: “We are generational wealth builders through real estate.” Affirmations can help a family see beyond their current limitations and further develop an ownership mindset.
3. Become a student of the industry.
The more informed we are, the better decisions we can make to avoid financial hardships and setbacks. Awareness allows a person to better weigh their options and create the most effective investment strategy. We know the industry is always going to change, so it is important that we remain aware of real estate’s current trends and systems. Encourage your clients to have every generation within the family take financial literacy, business and real estate investing classes from industry experts.
Financial literacy is especially important to obtain and maintain real estate. Yet, younger generations are not always taught financial literacy at school. Older generations should help them establish a habit of budgeting and saving early to avoid financial challenges in the future. Explaining the importance of and creating a budget for their allowance, work and gift money will increase the likelihood of them being financially-savvy throughout their lifetime. It’s equally important that the older generation sets an example by living by those same financial standards.
The key is that everyone is learning together, so when real estate assets are ready to be transferred between generations, they are well-prepared to maintain the inheritances and expand it.
4. Start a family real estate book club.
In addition to taking classes, clients can start a family real estate book club. This is a great way to learn together but also increase communication and dialogue across generations on real estate-related topics. If you are a part of a real estate book club, invite your clients and their families to join you.
Workbooks are also recommended. I suggest ones with hands-on activities and case studies of real-life scenarios to better equip and engage the entire family in their goal to build wealth through real estate.
5. Invite the younger generation to shadow the homebuying or investing process.
Encourage clients to bring children or young adults with them to witness and better understand the homebuying and investing process.
Exposure makes an impact on what people believe is possible in the future. I see many buyers leave their teens at home during the home inspection; however, the home inspection stage can be an opportunity to expose their child to a possible career field. In addition to learning about assessing the quality of a property, the young person may grow to love the job of a home inspector or contractor, which can be helpful to them later on as an investor.
6. Offer real estate internship opportunities.
As REALTORS®, we can all use a hand with secretarial duties like organizing files and documents, answering calls and scheduling posts on social media pages. As rules and regulations permit, we can create internship opportunities for youth to expose them to the day-to-day activities of a real estate professional. My very first job as a teenager was working with my dad, a real estate investor and property manager. I assisted him in the management of his properties by painting and doing maintenance work, and it was a catalyst to my successful real estate career today. Moreover, this is an effective way to give the next generation more exposure to the real estate industry, including networking opportunities and basic job skills to prepare them to effectively run and manage their own real estate business one day. It’s all about making an income while making an impact.
Building generational wealth through real estate is more than just a catchy phrase; it can become a reality for others when we are intentional about creating and implementing consistent plans of action.
As REALTORS®, it’s important that we share our keys to building wealth through real estate and unlock access to the next generations through exposure and education.
Purchase Donna J. Rogers book & workbook Who Got the Keys? Building Generational Wealth through Real Estate.