Using Inheritance and Real Estate to Build Wealth

As wealth begins to transfer from one generation to the next, many Millennials and Gen Z’ers are finding themselves in unfamiliar territory: managing inherited assets. How can that money be strategically used to continue growing inherited wealth? Real estate. Here, we cover real estate investment as a wealth strategy for the next generation.

Why Real Estate?

When you think of building and protecting wealth, your first thought may be of the stock market. However, that’s an unpredictable, often volatile, space. While all types of investments come with risks, real estate tends to be one that appreciates steadily over time. Historically, property gains value and comes with the added benefit of being a tangible asset.

Real estate investment can be a smart move for younger heirs, as it opens the door to passive income. By using inherited wealth to invest in rental properties, you can generate consistent monthly income that can supplement other revenue streams.

Rental property investments also help protect generational wealth. You’ll be creating opportunities for the younger members of your family.

Smart Ways to Invest Inheritance

While there’s no one-size-fits-all approach, here are a few savvy ways to kick off your real estate wealth strategy:

1. Buy a Primary Residence

Purchasing your first home is a major milestone, both financially and personally. But the right property doesn’t just put a roof over your head—it builds equity and appreciates over time.

2. Invest in Rental Properties

If you’re looking to create ongoing income, rental properties can be a good option. With many different types and price points available, you can buy what’s within your budget and rent it out to long-term tenants. The generated cash flow helps pay off the mortgage, all while the property grows in value.

3. House Hacking

House hacking is when you purchase a multi-unit property, live in one of the units, and rent out the rest. It can dramatically reduce (and in some cases even eliminate) your living expenses while having the added benefit of building equity in a valuable investment. If you’ve received a substantial inheritance that qualifies you for the purchase of a multi-unit property, it’s definitely worth considering.

4. Short-Term Rentals

If you’re in a tourist-friendly location (AKA nearly anywhere in San Diego), short-term rentals could be an excellent component of a real estate wealth strategy. While they may require more management than long-term rentals, the returns can be significant, especially during peak seasons.

How to Get Started

Real estate can feel overwhelming, especially if it’s your first time investing and managing significant assets. But with the right guidance and real estate agents, it can be a smooth, stress-free experience. Here’s how to get started:

• Understand your financing options: It’s important to learn about down payments, different types of loans, and how to qualify. Even if you’ve inherited a significant amount of money, using it all to purchase property may not be the right move for you; financing could be your best option.
• Choose the right location: The neighborhood could make or break your investment. Proximity to amenities, transportation options, and even schools could make a big difference in how the property appreciates over time.
• Partner with local experts: Working with real estate agents who understand rental property investments and the local area is critical. The Selby Team specializes in helping buyers identify high-potential and undervalued properties, and we’ll create a customized strategy to help you achieve your real estate goals.

Ready to Build Wealth Through Real Estate?

If you’ve recently inherited wealth or are taking steps to create your own, real estate could be your smartest investment option. Let’s connect to explore how you could use it to create a profitable, stable future. Schedule a free real estate strategy session to get started!