Real Estate Investing Basics

How to Teach Your Kids to Be Self-Made Millionaires

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smiling father and teen son hugging on sofa at home and looking at each other

Recently on the BiggerPockets Podcast, I asked airline pilot and real estate investor Steve Rozenberg to tell listeners a story about his son that I thought was just fantastic. It’s so good, I want to share it here, too.

The Importance of Teaching Your Kids About Real Estate

Here’s what Steve had to say.

There’s a great lesson that I learned from this that I really try to pass on to people now. It was never planned, I’ll say that from the beginning.

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So, I have a 15-year-old son. When he was 14, he came to me one day and said, “Dad, I want to buy a rental property.”

It kind of took me by surprise. Now understand, I listen to a lot of radio shows and podcasts, and I’m always listening anytime I’m in the car. I’m listening to an audiobook or podcast, so he’s immersed in it without me even realizing he’s getting it. You think your kid’s just sitting there, staring out the window, but he’s actually listening, too.

So I said, “OK, well you don’t have any money. How are you going to buy your own rental property?”

And he said, “Well, I do have some money.” I asked him how much, and he said, “I’ve got $10,000.”

My first thought was like, how did he get $10,000 without me even knowing?!

But he said he’s been saving and he has this money and that money, and so he can buy a rental.

I told him that’s not enough. You need more money. If you’re going to buy conventionally a standard deal, you’ll need more.

He asked how much. I responded about $25,000. What he said back I thought was very interesting.

He said, “Well, how do I do it?”

Related: Ultimate Beginners Guide to Real Estate Investing

I told him he has two options: he can either save the rest of it or try to get some creative deals—maybe partner with someone. He said OK.

So, he comes back to me a couple days later and said, “If I save the money, I’m gonna be 28 by then, because it’s taken me 14 years to get this.”

“Yeah, you’re right,” I said. “So, what’s your other option?”

He brought up how I mentioned partnering with someone. He asked what that would mean.

I said, “Well, you and somebody else can put in the money, and you can be 50/50 partners. Basically, you take on half the debt and he takes on half the debt, and you buy it together. Or you can do things where they run the property and you put up the cash, or vice versa. There are many ways to do it.”

He asked if I’d go in half with him. I asked him what the terms were going to be.

He looked through me like, come on, Dad.

But I told him this is business, and this is how you’re going to learn. If you don’t know the answers, this is how you get burned and this is how people take advantage of you.

I said, “So, this is a lesson: Don’t let me take advantage of you. Tell me the terms.”

He went and did some more homework.

You know what's funny? About three months prior to that, he was asking me about real estate. I talked about appreciation and debt paydown and equity captured, and he asked me to explain it to him, which I did. I explained it to him and drew a map of the U.S. and what properties appreciate where and why people buy. And one day, I went into his room and it was up on his wall—like he was looking at it and studying it. It was just always up there on the wall, and I never said anything.

And then, a couple months later is when he asked me this question.

So, he said, “Well, how about if we did 50-50?”

I said OK and asked who’s going to manage the property. He said it could be my company. I asked him if that was a good deal. He didn’t know.

I said, “First, you need to work this backwards. You have to explain to me: What is a good deal? What kind of property would make sense with all the expenses taken out of it, what kind of property makes a good deal? What is your exit strategy on this deal?”

No one ever talks about the exit strategy, which is one of the things that I’ve learned. Even if you don’t know what it is, you at least have to think about what it is. Is it a 1031? What are you going to do with it?

So, we went through the gymnastics of it. He got a couple sample deals, and I told him, “We’re not going to go looking for a deal until you can tell me what is a good deal, because if you cannot identify a good deal or bad deal, there’s no way anyone else is going to tell you whether or not it is. They’re going to rip you off, so you have to know what a good deal is to you before you can go outside this realm.”

We went through the cash flow, cash-on-cash return, and I forgot what exactly the numbers were, but we both decided, OK, this is the deal we’re looking for. So now, when this deal comes across our plate, we know it’s a good deal and there’s no question about it. It either fits our parameters or doesn’t.

I didn't want him to have to learn make-readies or big rehab jobs. I wanted him to get a cookie cutter-type property. I had some buddies that were flipping and all that stuff, so I told them what I was looking for—something pretty much done.

Related: Help Me Analyze This Real-Life Deal That Just Came Across My Desk!

Knowing we were going to pay more for this, I told him, listen, it’s done. You either pay now and do the rehab, or you just get it.

This house, literally, we got the property, we closed on it. Four days later, we put a tenant in. It’s been rented ever since. Never hear about it.

My son gets the cash flow. My wife makes him put 40 percent back in to reinvest to buy another property, and he gets to keep 60 himself. So, now he’s understanding.

I told him, “Listen, Jet, if you had 10 of these, think of the cash flow coming in.”

He’s like, “Yeah, I wouldn’t have to work.”

I said, “Or you could work and exponentially speed this up.”

He said that was a good point. His goal now is to own five before he gets out of high school.

I’m thinking, man, I didn’t own my first house until I was 30.

So, I just think the one thing I’ve learned is that we all work so hard to get wealthy, and we never want to see our kids suffer. But giving our kids a portfolio of properties is not actually helping, ya know? Teaching them the legacy of how to keep building that is key.

I’m realizing how many people out there are trying to be successful, but they never teach it to their kids. They’re not building a legacy for their family, because giving them that money, it’s like giving someone a good deal. They can lose it just as easy if they don’t understand the fundamentals.

I think it is very important to take this education that we’re all working so hard grinding, trying to get better, and actually sit down with our kids—or whoever—and just showing them how they can carry on that legacy. I don’t think many people do that, and I think it’s something we should be doing. Otherwise, it’s going to stop, right? It’s not going to keep passing through generations if we don’t keep doing that.

They’re going to say, “My dad made a lot of money. I got the inheritance, and I spent it.”

That’s not really doing them any favors, in my opinion.

I told Steve that people often ask me if I’m going to homeschool Rosie (my daughter) or send her to public school. I say, yeah, I am going to homeschool her. She might go to public school, too, but either way, school doesn’t end at 3.

She will know more about cash flow and financial freedom and wealth and all that when she’s seven than most people know when they’re 30.

“By doing that, just think of what they’re learning,” Steve said. “They’re learning a skill that I don’t think they’re going to learn in school.”

I agreed. No, they’re not.

Do you have kids (or plan to)? Have you spoken to them about investing (or do you intend to)? 

Let’s talk in the comment section below. 

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Don Chamberlin from South Lyon, MI
    Replied about 1 year ago
    Love this. Thank you for sharing. That’s very encouraging!! (And congratulations on raising an extremely intelligent son!) My kids are approaching (oldest is 14)... and this has been on my mind a lot lately. One question: What was the business structure? JV with both names on the LLC, etc.? Thank you again!!
    Karen Kasjaniuk from Tallahassee, Florida
    Replied about 1 year ago
    Great question! I'd love to hear more about this too ...
    Kevin Futrell Investor from Port Orchard, WA
    Replied about 1 year ago
    I love this story. Steve has a video online about the flipping knives his son spends his money on.
    Matthew Pich-Maxon Realtor from Big Bear
    Replied about 1 year ago
    Golden.
    Chris D. from Tacoma, WA
    Replied about 1 year ago
    Great article and there is not enough emphases put on money and financial responsibility is school. But even more so people are so guarded about money even after school. If the world was more transparent and open about it we would all be better off. Nice work dad!!
    Jesse Smith Rental Property Investor from Kansas City, MO
    Replied about 1 year ago
    I definitely enjoyed that podcast episode. My daughter is 4 months old, and she's already coming along with me to "help" with property maintenance and tenant screenings.
    Jennifer Ashmore Realtor from Little Rock, AR
    Replied about 1 year ago
    This is what I long for my Dad to understand Brandon. He is a real estate mogul and he recently retired. He sold his business to CBRE in Dallas just a few years ago. I desperately want him to believe in me and he “loans” or “gives” me money - enough to basically fail because I do t have that partner as it is almost embarrassing that it isn’t just this simple that the partner be my Dad...can you advise me on how to approach him again?
    N/A N/A Investor from Oak Creek, Wisconsin
    Replied about 1 year ago
    Love this, and sharing with my kids!
    Charles F. Walker III
    Replied about 1 year ago
    Great article! I’m in the boat as well. I have THREE little angels, ages 4, 2, and 1 (all girls ! ). I’m an older parent and this topic concerns me all the time! How do I keep all that I have been learning and striving to achieve going after I’m gone. No one knows or has my level of knowledge, as I have been striving my entire adult life to achieve financial success. Keeping/maintaining the family nest egg intact after I’m gone is my concern/fear, as the Mother of my little angels doesn’t have the background/knowledge to maintain that little nest egg. Any thoughts or ideas of how to keep the nest egg intact and growing, should I not be around long enough to be able to teach and mold my little angels
    Charles F. Walker III
    Replied about 1 year ago
    Great article! I’m in the boat as well. I have THREE little angels, ages 4, 2, and 1 (all girls ! ). I’m an older parent and this topic concerns me all the time! How do I keep all that I have been learning and striving to achieve going after I’m gone. No one knows or has my level of knowledge, as I have been striving my entire adult life to achieve financial success. Keeping/maintaining the family nest egg intact after I’m gone is my concern/fear, as the Mother of my little angels doesn’t presently have the background/knowledge to maintain that little nest egg. Any thoughts or ideas of how to keep the nest egg intact and growing, should I not be around long enough to be able to teach and mold my little angels to have the mindset and teachings to carry on my work ?? My Father passed at a fairly early age, about 62/63. This concern remains in the forefront of my thoughts. Thanks in advance!
    Tushar P.
    Replied about 1 year ago
    Don’t forget to let the kid enjoy their childhood years and live like a kid 😉
    Braxton Beyer Software Engineer from Austin, Texas
    Replied about 1 year ago
    This is a great lesson, but he was 14 and had $10,000 already. That's not very realistic. How many 14 year olds have that kind of money?
    Cathy Lippert from Cleveland/Akron Area
    Replied about 1 year ago
    Great points. My twenty somethings are getting a good dose of what it takes to be successful in real estate, the older one having also attended a one week seminar with me a few years ago before graduating from college. Hopefully this will be enough for them to know how to manage their inheritance. But we started late, so no guarantees that enough of what we do has rubbed off. Start earlier than I did!
    Bryan Lee Rental Property Investor from Downey, CA
    Replied about 1 year ago
    Brandon, Thank you for sharing this incredible story!! Well done Steve! Well done. My why is what you just did. I have a few more years to go with my little man who is only 5, but I can't wait to walk with him and teach him as you did with understanding real estate. Thank you again, Brandon, for sharing this story as I am new to real estate investing but I am so excited about it and love all that you guys do here at BP! Keep it up!
    Adrian A. Ramos Rental Property Investor from South Padre Island, TX
    Replied about 1 year ago
    Great story. Just read the Richest Man in Babylon for the first time and loved it, then reread Rich Dad Poor Dad. I got to thinking. .... hmmm my 15 yr old grandson needs this. I was about to send him a copy but he’d already read it. So how about the Richest Man in Babylon. His mom send me a pic of his desk with the book right on top. He’s already on the right track, hopefully I can give him some good examples of good deals as I am educating myself and looking for my first deal.
    Adam Cole from Rochester, MI
    Replied about 1 year ago
    Growing up I never had this sort of exposure and I am just imagining how different my life would have been if my parents taught me that financial freedom is possible. Not having to succumb to the generic life of a corporate job is possible. But my thought is that it is better to actually start something and be the guy/gal that takes the risk, as opposed to being the "I shoulda" or "I coulda" person. I work with some of those people everyday and it's hard to imagine a life of being under somebody's thumb for 40+ years.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied about 1 year ago
    "And this is how you inherit my money..." Oh wait, self made... Yeah that would be better.
    Neil Crook
    Replied about 1 year ago
    Man this is an epic post and perfectly timed. Our kids are way to young yet (3 and 1) but me and my wife are working towards this teaching and having a decent sized portfolio for the kids to take over after we've long gone. Steve, hats off to you how you steered your Son in to the teaching and not just gave him the answers. I really admire that I hope I can take even a small part of this wisdom and install it in to our kids. Cheers
    Olivia Radziszewski from Chicago, IL
    Replied about 1 year ago
    I love this! I will definitely implement this with my 15 year old, although she is currently just wanting nice things and not so interested in working for things herself.
    Dave Rav from Summerville, SC
    Replied about 1 year ago
    A Rich Dad AND a Real Dad...how about that?!?
    Mark DeLorenzo Investor from Bangor PA
    Replied 12 months ago
    I love this as well. Just yesterday my wife and I were driving somewhere with our 8 year old daughter and she was obviously listening in on our conversation and chimed in "Dad, why are we always talking about financial stuff when were on car rides now." I know she's only 8, but I talk to her like she is 20 when it comes to this kind of stuff hoping that just some will sink and now and even more as she grows. I really want her to understand what can be in life and not just what they drone out in school to the masses.
    Jessica Roland Investor from Atlantic, IA
    Replied 12 months ago
    I read it to my kids last night. My 9 year old had already asked if kids can own real estate and we've talked about contracts vs bank loans. When I told him we bought a house on contract for $500, his eyes got big as saucers. He and his older brother were motivated to work on their business plan of snow shoveling and odd winter jobs. They are planning to put it all in the bank! They don't get birthday money or allowances so will need to work hard for it, but they are really thinking about all this. Before bed they were even talking about buying land in Colorado to build a ski resort. Thinking big! Lol