Why Educating Your Children About Real Estate Matters

24

I think it’s important to Pay It Forward.

I don’t know why I feel this way, but something tells me that helping people will pay off in spades.  I don’t really believe in subsidizing folks however; I am more about teaching them how to think, and I specifically enjoy working with older kids and young adults (11 – 15).

One of the local schools in my town approached me about doing a 4-day finance class as part of their summer camp.  I had worked with many of their students in different capacities before, and the president of their board thought that the kids would dig a class all about how to make money…

Good For Them

Incidentally, I want to give the school props.

They are a charter school and as such they can pretty well do whatever they think is best for the kids.  In a national educational system that simply doesn’t seem to make any effort to recognize economic realities, realization that a financial intelligence class is good for the kids is an accomplishment in and of itself.

Not only that, but reaching out to someone who is outside of the teaching profession and is an actual entrepreneur who has not had a job for years, also speaks volumes…:)

My Plan

Well – the kids loved the experience more than I could have anticipated.  My plan for the class was to simply use the Cash Flow game by Robert Kyosaki to underpin a discussion of the basic aspects of personal finance.

On Monday, the first day of class, I planned to cover concepts such as:

  • Why people need a job
  • Why it may or may not be the best and safest way to generate income, and
  • What other ways we can earn money if not a job.

Two things happened that I did not expect.  First, while discussing the concept of income and how we need income to cover expenses, when I posed the question of what else we can do for money if not a job, one of the kids answered – build an ATM…

WOW – isn’t this the truth?!  As you can imagine, this opened the Pandora’s Box.  Naturally, the kid that verbalized the idea of an ATM actually meant a mechanical money-dispensing ATM, and naturally I had some fun with that.

We talked about it, but in the end, having been unable to translate the principal of building an ATM into real terms for the time being, we started the board game.  Things remained quite confusing when the first day of camp came to a close…

On The Way Home

I left for the day, and on the way to the car I checked my e-mail.

A message had come-in inviting me to do a walk-through at one of the properties I am considering for my syndicate.

Shoot – I thought to myself.  I had been hesitant to commit to doing this camp specifically because of how much time I spend on the road now days looking at deals, and what I was afraid of happened – I needed to skip the class next morning since I could not miss the walk-through…

I came home kinda disappointed and did what I always do – asked my wife what to do.  Patrisha is wise beyond her years.  She let’s me do whatever when it comes to real estate finance and acquisition, but she takes the lead on everything else and I never argue…

She said – why not make a field trip out of it; it’s what this class is all about anyhow?

Keen sense of the obvious – that’s my wife.  I called the director of the school; she called the children’s parents; it was done.

Related: 6 Ways to Teach Your Children About Building Wealth

The Trip

Next morning I picked three kids whose parents signed the releases and we drove for a little over 1 hour each way to walk this apartment community.  We were there for about 3 hours.

They heard me speak to the realtor, the property management team, and the maintenance supervisor.  They heard me ask questions relative to the operations of this “ATM” – yes, during the car ride to the asset, I tried my best to explain to the kids that this building, if I buy it, will be my ATM…

They sat quietly while I reviewed the updated version of the OM and the latest set of financials.  They listened while I asked questions of all present.  Then we walked every vacant unit and discussed things with the maintenance supervisor.  They saw units that were off-line and in shambles, and others that were rent-ready but vacant.

On The Way Home

We left after about 3 hours.

Needles to say this was an eye-opening experience for the kids.  On the way back, they asked me how much I would pay for this property, and I told them.  They asked me how I could afford so much money, and I told them that as well.

I explained to them that this property is akin to an ATM not just for me, but for my investors as well…things were beginning to make sense now, and the kids couldn’t wait to get back to the game J

The Moral of This Story

The next two days in class we continued playing, and the children were really into the game.

By the end of the last day in class, all but 1 player had made it out of the “rat race” onto the fast track – the doctor was the only one left behind, which in and of itself was educational.  The janitor won, and so did the teacher, but the doctor was carrying too much debt for all of those toys.

We parted after four days.  I am a teacher in my heart – I always have been.  I get off on seeing the look in someone’s eyes when they wrap their brain around something for the first time.

It’s exciting, and I saw a lot of looks like this over those four days.  Those kids left knowing something that most of their classmates and many of their parents may never comprehend, and that is this:

Work hard to build your ATM.  Don’t work hard to be the ATM!

Conclusion

I think it’s important to pay it forward.

Brian and I are taking a serious look at the building the kids and I saw, and if everything is as it seems for now we’ll probably make a run for it – I’ll keep you posted.

Related: Real Estate Investment Advice From Warren Buffett

In the mean time, I encourage everyone reading this to reach out into your communities and to pay it forward.  Just by being here on BiggerPockets you are in the top 10% of financially intelligent people in this country, and you should give back.

And Joshua, if you are reading this, perhaps it would be a worthy project to put in place some type of an outreach to school-aged children here at BiggerPockets.  This happens to be something I feel passionate about, and while I can and am doing what I can on my own, together we can make a much greater impact!

Talk to me guys – what do you think?

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About Author

Ben Leybovich has been investing in multifamily residential real estate since 2006. His area of expertise is creative finance. Ben works extensively with private as well as institutional financing. Ben is a licensed Realtor with YOCUM Realty in Lima, Ohio. He is also the author of Cash Flow Freedom University and creator of a cash flow analysis software CFFU Cash Flow Analyzer.

24 Comments

  1. Good job Ben! I’m a firm believer in both helping others and especially involving the next generation. I took my daughter to my 56 unit complex during the due diligence stage as well as the walk through with the banker. I had her take notes and pictures of everything she liked and didn’t like and then quizzed her on what she would do with the property. She sat through all the meetings with the resident manager and banker and walked through the units with us. Ultimately her advice was not to buy it as the units were too small for here taste:) I bought it anyways and as you know its been a nice ATM machine for us.

    The next project will be collections. I’ve automated that process so I’m thinking how exactly to involve her but the key message is to see the struggles of a paycheck to paycheck renter compared to the lifestyle afforded by being on the other side.

    Not exactly “fun” time for kids but these are lasting impressions that they will surely remember. I applaud you for being a financial hero for these kids. It has the potential to change 3 lives and I would challenge all investors to do the same. Best of luck with the 40 unit, it looks promising.

    • Ben Leybovich

      Thanks Serge!

      My kids at 5 years of age are likely more financially educated than most 20 year-olds. But, while education of my children is automated by the environment they live in every day, most kids do not have this. It’s always gratifying to reach out!

      Thanks for reading buddy. It occurs to me that we haven’t chatted on the phone for like 3 days – feels strange :)

  2. Roberto Reyna on

    A very big Texas size salute for teaching young people financial literacy, perhaps you are following Robert Kiyosaky. I hear this so much in every podcast by Joshua and Brandon, when they ask who’s your favorite real estate author? 9 out of 10, say Rich Dad, Poor Dad. Very few actually say I am trying to teach others what I preach. Very commendable for stepping out and showing the rest of us, that you actually can do more than build a shed.Keep doing what you’re doing, I applaud you! !!

  3. Sharon Vornholt

    Great, great post Ben!

    I have been dragging my granddaughter to closings for years. I want her to understand how money is earned other than from a conventional job; that you have choices. I want her to see first hand how you make money with real estate. (We look at the HUD1 too).

    Whether or not she goes into real estate or not is unimportant. I want her to understand how to “create cash”.

    Did you know that Success Magazine actually has a program for teens? I think you can get it free if you plan to teach it. The magazine always has a monthly lesson in it just for teens too.

    Sharon

  4. Ben,

    My 3.5 year old has been walking properties with me since … well, before he could walk.

    For the past year every time we pass a building/house with a “for sale” sign he thinks he must stop and walk through. This was particularly awkward a couple of months ago when a sign went up in a neighbour’s yard and my son marched up their front walk to announce he was there to walk through their house.

    On his third birthday we gave him a “money smart” bank shaped like a cow (whose name is Moolah, BTW). It has four compartments: spend, save, donate, invest. Though he is a little young to full grasp the ideals, we are working with him on these concepts. His invest compartment is dedicated to buying his first property, which he has announced he will do after he starts school … so I guess we have a couple of years to wait on that one ;)

  5. Ben,
    This is one of the coolest posts I’ve read on BP. I applaud you’re effort and your wife’s genius. I have two young children and I love the idea of teaching them how to think about life from this perspective. I wish I would have learned it when I was a kid.
    Keep up the good work!

  6. Sharon Tzib on

    Even though I had a business owner father, besides teaching me how to balance a check book, he never really taught me any other financial literacy metrics, like DTI, mortgages, cash flow, etc., so I had to learn it on my own.

    This is why I’ve been so passionate making sure my grandsons understand all these things. I’d love to do what you’re doing and teach more kids. Perhaps I’ll speak to their school when I return to the States. Great ideas, and I’m loving the stories in the comments. Take care, Ben.

    • Thanks Sharon!

      Yeah – the comments are great :) I think that all of us here with children have similar perspective. The younger folks are still just trying to figure things out for themselves and perhaps not yet thinking about passing it on. But, they will get there, and I just think that BP is perfectly positioned to have a not for profit arm or some other vehicle to do outreach. There are enough of us here to pitch in…

      I thank all of the folks who have commented!!!

  7. Dave Tanner on

    I can just see a classroom with a bunch of 4 yr olds. Teacher says, what do you want to be when you grow up? One says a fireman, one says a police man, Ben’s kid says I want to be a real estate investor focused on syndicating large multi-family housing deals. Teachers mouth drops…. What?
    Growing up my dad’s risk meter was broken so he taught me how to jump into business without all the info,tools, and team. He had 2 business fail, and a personal bankruptcy. Consequently I am probably too conservative at times, insisting on having sizable equity, aggressive payoff schedules, etc. But I sleep pretty good at night knowing I have a large safety margin and my family should never have to experience what he did.
    Great article Ben. The public schools do not teach this stuff, and if they did most would get it wrong.

  8. Chantelle Williams on

    I totally agree that we need to teach our children about financial independence. We also need to teach them to give back and help others. God put us all here for a reason and we need to share our talents with others. You’re fabulous, Ben!

  9. I think that one of the best books to try to get kids to read for financial literacy education is “The Richest Man in Babylon”. Timeless principals for everyone.

  10. Ken Huston II on

    Good job Ben. And your wives advice was spot on. Funny how we get caught up in the moment and forget that a real life situation can teach so much more than a class room. BTW, my three year old daughter was walking properties with me before she was one. And I just spent two days rehabbing an apartment with my twenty year old son. (Don’t ask, Im thinking reality t.v. show). I think my three year old shows more interest in all of it.

  11. One of the great benefits of RE investing has been the time it allows me to spend with my 12 kids. They range in age from 9 months to 22 years. There is something they can do at almost any stage to help out. Gives us great family time while earning a living together!

  12. Ben that is one of the best stories I think I have ever heard.
    What an amazing experience for those kids.

    I give you all the accolades possible for doing that for them.
    Mr. Leybovich you are a good man!

  13. Gray article Ben! I am a middle school teacher by profession and this post hit a very special place to me. I agree that Bigger Pockets should come up with some outreach to school age kids. It would not only be beneficial to the kids, but speaking from experience, I learn so much by teaching. This is why I love BP so much. Gives you the opportunity to teach and learn and learn by teaching.

  14. I thoroughly enjoyed this read! I too come from a financial background and have wondered how to get kids involved with money through simple things like budgeting. This was great! I am very active in my kids elementary school and plan on bringing this story up in next years CSC Meeting(s). Thanks for caring enough to give back, it really is important!

  15. Great article. Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a Real Estate, I found a blank templates from this site PDFfiller. This site also has some tutorials on how to fill it out and a few related forms that you might find useful. Here is a link to HUD-1 form that I was able to use http://goo.gl/ZtboLx.

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