Once upon a time, loving and thoughtful parents used part of their savings to invest in Real Estate so that one day their children could build their own dream homes. But lately, I’ve been listing those pieces of land handed down from one generation to another.
Just recently, I met a retired Military man who purchased one of my lot listings. It was his second Residential Lot purchase in one week. He shared a little piece of his story with me saying that he was buying the land so his kids, “will always have somewhere to come back to.” In my mind I was thinking, “sir, they’re just going to sell it!” Of course, I refrained from speaking since I was representing the Sellers. But when I left the buyer, I couldn’t help but think about his noble intent.
Later these “children,” who grow into adults, will sell the property with no intention of building on that piece of land their parents sought out for them. A part of me feels bad for the parent, because I know how much effort goes into investing for the future. Of course, I also hold sentimental value when it comes to a gift from a parent!
The truth is, the land-purchasing parents are on the right track! The parents and grandparents who place their hard-earned money into real estate, are the people who earn great equity in their investment! Nowadays, a Savings Account or a Mutual Fund might yield a 1.20% – 17.00% return (respectively) annually. In other words, deposit $1,000 into a regular savings account, and you MIGHT earn about $12.00 by the end of the year. Hmm… ok?!? Deposit and save $5,000 into a Mutual Fund and (if you’re lucky) you may earn about $8,500 in ten years!
WHAT’S THE RATE OF RETURN ON REAL ESTATE? Well, many brilliant parents who spent $5,000 on a piece of land ten years ago have earned more than four times their initial investment (regardless of what the stock market did)! That’s $20,000 in ten years!
So what does this mean for their “children?” Looks like the new generation of home buyers are selling their inherited properties and profiting from their parent’s humble investment. AND THE GOOD NEWS IS… With the money they are making, they are paying off debt, helping their parents and YES… they are building their dream homes after all. It may not be on that piece of land Mom and Dad bought, but it’s close by! 🙂
…and they ALL lived happily ever after!
P.S. I don’t feel bad for the parents anymore! They knew what they were doing… they are wise and their children are ever so grateful!
————- PAY IT FORWARD———–>>>
Want to invest for your next generation? Here are a few links to help get you started.
Val Aranda, REALTOR
“Offering valet real estate service around the clock.”