Rookies. Wanting to learn more.

[Thomas C Rowe]

My wife and I are looking into what it will look like for us to invest into rental real estate. Looking more for cash flow units. But also want to be able to leave somthing worthwhile for our children. 

[Lauren Robins]

That’s a thoughtful and powerful goal—investing in rental real estate not just for short-term cash flow, but also to build generational wealth. Many families start their real estate journey with a similar mindset: generating passive income to improve their lifestyle today while creating a legacy they can pass on to their children. Rental properties can provide both, but success in this strategy hinges on careful planning around asset selection, management, and long-term ownership structures.

When focusing on cash flow, it’s essential to find properties in markets where rents can meaningfully exceed operating costs and financing expenses. These are often not in the most expensive areas but in more affordable secondary or tertiary markets with stable job growth, population trends, and landlord-friendly laws. Look for neighborhoods with solid rental demand, low vacancy rates, and value-add potential—like units you can improve slightly to raise rents or reduce expenses. As you acquire more properties, consistent cash flow can supplement your income and eventually support financial independence.

For the legacy-building aspect, real estate shines as a long-term wealth preservation tool. Properties tend to appreciate over time, and rental income can increase with inflation, which makes them a natural hedge. More importantly, you can pass down real estate to your children with significant tax advantages, such as the "step-up in basis," which can reduce or eliminate capital gains taxes upon inheritance. Setting up a revocable living trust or family LLC can help ensure your properties transfer smoothly to your heirs while avoiding probate and maintaining control over how assets are managed after you're gone.

As you move forward, think about creating a plan that balances cash flow today with the durability and structure needed for tomorrow. This includes making sure each property is well-insured, legally protected (often through LLCs or a trust), and that your estate plan is clear and updated. Education is key as well—bringing your kids into the conversation as they grow up can help them understand how the assets work and how to manage them wisely.

Starting with a single rental that cash flows is a great way to learn the ropes. Over time, as you scale with intention, real estate can absolutely be both the engine for financial freedom and a meaningful inheritance for your children.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.