My 12 year old bought his first house

My 12 year old bought his first house

Rental Property Investor 路 OKC, OK 路 Member since 2008 路 108 posts 路 235 votes

My 12 year old son closed on his first rental property last month - and now he wants to buy another. 

I think every parent wants to teach their kids about finance, and my wife and I like others, have struggled with how best do that without boring them to death.  So over the past summer,we offered to pay our 3 sons to read books (thanks BP podcast for this great idea!) of our choosing.  Our 14 year old son passed on the idea because he doesn't like to read and honestly would rather spend money on clothes and shoes versus saving a single cent.  But our 12 year old is a fervent reader and quickly read "Rich Dad for Teens" while we were on a vacation to Durango.  The deal was, however, that he had to read it and be able to have an intelligent discussion about the book's core concepts.  

On the drive home he began to explain assets versus liabilities, earned income versus passive income, etc. and it seemed as though he really had a solid understanding.  Over the following weeks, he asked if he could use his "stock money" to purchase a rental home since he had seen us building our rental portfolio.  This lead to further discussions about leverage and how to make OPM work with tax savings.  Of course these were cursory discussions but I was surprised at how much he actually retained.  So we told him we would help, but he would have to do most of the heavy lifting and use his own money.   

Over the next few months, he would ask me to drive him around to go look at houses. I really think he was equally as interested in going to lunch with Dad - the boy likes to eat! - but either way, we looked at lots of properties together. He carried around a notebook and wrote down Realtors' numbers, made calls himself, made "guestimates" of repair costs, rents, how much he would need for a down payment, etc. and we practiced crunching the numbers together. I made him talk to the Realtors directly and I was amazed by how many spoke to him as if he was an adult investor and not a 12 year old. We made many offers which didn't pan out. But one evening just after he had gone to bed, I received a call from a Realtor that a HUD property that we had inquired about would go to investor status the following morning and so we put in the offer we had previously discussed and it was accepted the next morning.

We had started a DRIP (dividend reinvestment plan) when each of our boys were born and asked family to give birthday and Christmas gift with that in mind.  So they might get $100 total and $25 of it could spent on a toy and $75 went to their stocks.  And my wife and I made an automated $25 contribution monthly to each of their account.  This grew over times and was intended to be college money or retirement money or whatever they chose once they were adults.  But we agreed to let our 12 year old cash some of this in to buy this house.  So he provided the $11k down payment and $1500 or so closing costs.  Also the approximate $3k in repairs were provided by him.  I understand that there will be some naysayers who will say that it's truly not his house since the mortgage was obtained in our name and the house was titled in our name.  But we have contributed zero dollars of our own money.  And after consultation with accountants and lawyers, this seemed the best way to go about this and we will title it to him at age 18.  Any cash flow will go to replenish his stock account and potentially fund more properties.  And he's definitely involved.  We did take him out of school to attend the closing, I've taught him how to change the locks and do basic repairs, and he has to stay up to date on the financials on his house.  

So my 12 year old is already looking for his next property, my 9 year old now thinks he want to do the same but doesn't yet have the comprehension of the basics to move forward, and my 14 year old just bought another pair of shoes!  

Sorry for the long post, but I'd love to hear other people's experiences and thoughts on this strategy.

190Reply
522 views

Most Popular Reply

Springfield, MA 路 Member since 2017 路 11 posts 路 14 votes
9y
Wow I'm 23 and I want to be like your 12 year old great job on parenting and he's also doing a great job all the books I've read say to start early I guess he understood that perfectly
See this reply in the discussion

139 Replies

Jump to latestLatest
  • Investor 路 Saratoga, CA 路 Member since 2015 路 21 posts 路 4 votes
    9y

    This is a great story.  I love your son's perseverance and admire your parenting skills.

    Great job...All the best for a bright future for this young boy.

  • Specialist 路 Grand Rapids, MI 路 Member since 2016 路 1k+ posts 路 611 votes
    9y
    Drew Eldridge Hi Drew, I personally wouldn't pay the kids to read books of your choosing but that is my opinion now and I easily think it could change in the future. I kind of feel that your 12 year old may have even done it if you did not pay him just by suggestion. I absolutely love the support you gave your child which gave him the confidence to keep pushing. I will definitely take that as something I would personally use to pass on to our kids on their financial education.
  • Rental Property Investor 路 Mine Hill, NJ 路 Member since 2014 路 229 posts 路 396 votes
    9y
    David Dachtera good point about the self directed IRA. I was able to start a Roth IRA for my now 1 year old when he was only 10 months old. Hopefully if there are other opportunities for him to earn some income and it can grow enough to be some sort of down payment for a rental property that would be amazing. Great suggestion Drew Eldridge awesome post! Super inspiring. Why do you think your first son is having no give and take with this, just innate personality differences, the age when you introduced it? What do you think?... I only ask because I have two sons, and I don't want one of them to write a book called "Rich Son, Poor Son"
  • Real Estate Agent 路 Flower Mound, TX 路 Member since 2016 路 12 posts 路 6 votes
    9y
    This is incredibly impressive for someone of ANY age- and not only for your son, but for you as parents! I hadn't even heard of the Rich Dad for Teens book, and don't have any kids of my own but I love your concept of raising financially-sound kids by rewarding them for learning. I myself am a millennial and I do agree with much of the stigma that many our age feel "entitled to participation trophies", yet I think it's extremely important for people at a young age to see that knowledge of any sort pays off in some way or another and is rewarding. Congrats to your son, and congrats to you and your wife for doing a fantastic job raising kids and teaching valuable life lessons along the way that will help them beyond school classes!
  • Investor 路 Greenville, SC 路 Member since 2016 路 5k+ posts 路 13k+ votes
    9y

    Wow, spectacular.  You should reach out to the rich dad organization and share your story.

  • Saint Paul, MN 路 Member since 2016 路 20 posts 路 5 votes
    9y
    I just want to congratulate your 12 year old!!! And tell you JOB WELL DONE FOR BOTH MOMMY AND DADDY!!!!!
  • Investor 路 Pocatello, ID 路 Member since 2011 路 25 posts 路 11 votes
    9y

    Thank you for the INSPIRATION! I have young boys and have added a house purchase to their pre-18 goals for them; they can't grasp the concepts yet. And I have some time to put together a plan and regular deposits for them, thanks to your post.  The problem I have now is that when I "drive for dollars" with the boys in the car, they know exactly what we are doing and moan about it all the time even though I tell them they eventually get something out of it. CONGRATS again to you and your boy!

  • Flipper/Rehabber 路 Dallas, TX 路 Member since 2015 路 91 posts 路 31 votes
    9y
    Love this !
  • Beloit, WI 路 Member since 2016 路 100 posts 路 40 votes
    9y

    Impressive! New goal fro my two kids!

    It's nit-picky to argue about the money; in your mind that money you set aside for him is his. Same with his brothers'. No one would say, "well Grandma Jane is actually owner of 2/100 of it since she'd given him X for every birthday." I think it's about the learning experience. Any excess taxes caused by this will pale in comparison to what this kid has learned.

    Previously I didn't agree with the idea of paying kids to read non-fiction; but looking back at my teen years and how much fiction I read...I'm all for it with my kids. Might cost me a pretty penny seeing as to how long my "must read" list is and how much they love to read. But a worthwhile investment, I'm sure.

  • Real Estate Investor 路 Elk Grove, CA 路 Member since 2014 路 14 posts 路 9 votes
    9y
    Oh my!! I need to get my children in gear. What were all the RE educational books your son read?
  • James MasottiPro Member
    Rental Property Investor 路 Washington Township, NJ 路 Member since 2015 路 1k+ posts 路 976 votes
    9y

    @Drew Eldridge. This is awesome. Well done sir

  • San Jose, CA 路 Member since 2016 路 1 post 路 1 vote
    9y
    Hi Drew! I think that is so impressive that he was able to do that. I congratulate you as well for incentivizing your kids to read. When I have kids of my own I will definitely make sure they read some of the Rich Dad series. Best of luck to you and your son!
  • Saginaw, MI 路 Member since 2016 路 31 posts 路 4 votes
    9y

    Inspiring..

  • Alex CraigBusiness Member
    Real Estate Professional 路 Memphis, TN 路 Member since 2009 路 1k+ posts 路 1k+ votes
    9y

    @James Wachob make sure this kid is on your CRM. You will certainly want to take him to eat some BBQ and be his boots on the ground. 馃榾

  • Real Estate Investor 路 Sharon, PA 路 Member since 2017 路 9 posts 路 5 votes
    9y
    This is awesome!
  • Chris WoodPro Member
    Contractor 路 Greenwood, IN 路 Member since 2014 路 200 posts 路 33 votes
    9y

    Congrats! This is amazing parenting!..鈥 thought about doing something similar but not to this degree. You have encouraged me and I really appreciate you sharing your story.  Thank u!

  • Mechanicsville, VA 路 Member since 2016 路 12 posts 路 2 votes
    9y
    I love this concept! Teaching kids at a young age the importance of saving and financials is important! This is a great idea and maybe something I will use down the road for when I have kids!
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor 路 Kansas City, MO 路 Member since 2014 路 10k+ posts 路 5k+ votes
    9y

    Get them started young, nice!

  • Real Estate Agent 路 Jackson, MI 路 Member since 2017 路 25 posts 路 9 votes
    9y

    Awesome story @drew eldridge 

    My wife and I intend to do similar plans once our children get older. Nice parenting and I like the follow through on the reading for money plan.

  • Rental Property Investor 路 OKC, OK 路 Member since 2008 路 108 posts 路 235 votes
    9y

    Thank you everyone for the kind comments.  I just thought of a funny story about this - @Ron Harris does a monthly "Coffee with Investors" meeting and my son and I have been going when our schedule allows.  He also has attended our local BP meetup with me when it didn't conflict with school.

    I'm not going to lie, I think the treat of Starbucks is part of the draw but whatever it takes to stoke that enthusiasm is fine with me.  But everyone goes around and introduces themselves and says something to the effect of "Hi, I'm Drew, I'm a full-time blah, blah and am a part-time investor".  So when it got around to him he said "Hi, I'm _____, I'm a full-time sixth grader, and a part-time real estate investor". :)  He thought he was pretty witty with that - I guess he comes by his bad sense of humor honestly!

  • Lender 路 Falls Church, VA 路 Member since 2016 路 41 posts 路 22 votes
    9y

    @Drew Eldridge I believe that the number of votes you received on this one post should be proof enough that your son and his story deserves to be written into a book for me to enjoy in my car on my way to work. I know you appreciated the kind words and were not considering writing down and publishing it, but PLEASE I want to be the first one to buy this book (and autographed). Even if it is a couple years down the road I believe that this will become successful. Don't forget that I wanted this book first! Best of luck to you both.

  • Rental Property Investor 路 Rockford, IL 路 Member since 2014 路 4k+ posts 路 2k+ votes
    9y
    Originally posted by @Sunny Burns:

    David Dachtera good point about the self directed IRA. I was able to start a Roth IRA for my now 1 year old when he was only 10 months old.
    Hopefully if there are other opportunities for him to earn some income and it can grow enough to be some sort of down payment for a rental property that would be amazing. Great suggestion

    Now, the next thing is learn how to pay your sons earned income so you can build their IRAs and get a tax deduction for doing so! I have a referral on how/where to learn that, if you need one ...

  • Investor 路 Columbia, MO 路 Member since 2015 路 27 posts 路 25 votes
    9y

    Not to burst your bubble but by the time I was 12 my brother and I had already purchased a nice farmhouse with several outbuildings capable of raising livestock, acquired the equipment needed to run the farm, and paid cash for everything. I have since passed it on to my nephew to continue the family empire. I will post my proof pic since my nephew was over last month to take it home with him:

    Seriously though, you sound like a great dad! I wish someone would have taught me the ropes sooner. Best of luck and thanks for sharing your great story!

  • Rental Property Investor 路 Rockford, IL 路 Member since 2014 路 4k+ posts 路 2k+ votes
    9y
    Originally posted by @Eric S.:

    Not to burst your bubble but by the time I was 12 my brother and I had already purchased a nice farmhouse with several outbuildings capable of raising livestock, acquired the equipment needed to run the farm, and paid cash for everything. I have since passed it on to my nephew to continue the family empire. I will post my proof pic since my nephew was over last month to take it home with him:

    Seriously though, you sound like a great dad! I wish someone would have taught me the ropes sooner. Best of luck and thanks for sharing your great story!

    Mind sharing where you got the cash?

    That's not the kind of money kids can save up from their allowances ... 

  • Rental Property Investor 路 OKC, OK 路 Member since 2008 路 108 posts 路 235 votes
    9y

    @Eric S. That's awesome!  Thanks for the laugh.  I am pretty jealous of that fleet of sweet semi's!

Join the conversationCreate a free account to reply, vote on answers and follow this thread.