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5 Tips for Building Generational Wealth Through Real Estate

Grandmother putting coin into granddaughter's piggy bank.This article will discuss how to build generational wealth. If you’re reading this, it’s likely because you want to make a lot of money. However, you should not only learn how to make enough money to last your lifetime; you should also learn how to make enough money to give your descendants a head start.


The kind of wealth you are thinking of is money and privilege passed from generation to generation – parents to children and on and on. This wealth can be in the form of an ongoing business, shares in a company, intellectual property, expensive art, or real estate.

How are you going to create that wealth? Does your ability to build generational wealth depend on how much money you make during your lifetime or on how much of that money you can keep? Both are important, but one is even more.


We all have heard stories of people who made or inherited millions of dollars and still became broke. This happens because anybody can burn their way through money; it only takes time. Conversely, time can also be your best ally when building wealth.

With time it is possible to turn a few thousand dollars into a massive asset base that can sustain you and your future offspring for years to come. Generational wealth is determined not by how much money you have at the start but by how well you manage that money.


Foundations for building generational wealth

Team of four multi-ethnic employees analyzing, reading and typing business report on laptop computers and digital tablet while sitting together at office desk.The majority of those who inherit wealth (78%) lose it during their lives. The majority of wealthy families lose their fortunes within three generations. Even if money can be passed down through generations, the skill to handle it is often not.


Three things must be part of your wealth-creation strategy to build wealth that will last beyond the lives of your immediate heirs.

  • A generational wealth plan

A framework for responsible management of inherited assets. This plan outlines goals, objectives, roles, and decision-making processes. It helps family members develop the capacity to be financially responsible.

  • Impartial trustees

A governing body overseeing your heirs’ actions is vital for averting calamity. It shields the wealth from the inexperience and personal differences of your family. It also serves as an advisory body and sounding board for new ideas.

  • Assets with long-term growth potentials

Assets can retain their value and grow in the face of economic turmoil and political upheavals. These assets must be diverse and spread across different geographies.


Building generational wealth through real estate investing

Having established the foundation, what is the best asset for building generational wealth? The simple answer is real estate. Real estate is the best investment vehicle for millions of wealthy families worldwide to preserve and grow wealth.

What should you know about real estate investing as the arrowhead of your generational wealth strategy? These five tips will let you maximize your benefits when buying real estate.

1. Diversify your portfolio

Commercial real estate against blue skyYou may diversify a real estate portfolio by property type or geographical location. An investment portfolio that includes a range of commercial and residential properties in diverse areas across the country (or even the world) is less exposed to risk. With this strategy, you can take advantage of the high earning potential offered by specific locations or assets without unduly exposing yourself.

2. Take advantage of emerging opportunities

These can be emerging opportunities with a specific type of real estate or opportunities in new locations. For example, while the ongoing e-commerce boom has hurt the fortunes of certain types of commercial real estate, it has created opportunities for owners of warehousing facilities. At the same time, the trend is more noticeable in some locations than in others.

3. Invest for cash flow and capital gains

Keyboard with stack of moneyBuying rental properties that let you earn a reliable income while waiting for the asset to appreciate is a good strategy. Cash flow from rent means you do not have to spend out of pocket to maintain the property. Instead, the rental generates enough cash to cover its operating expenses and even let you make a profit.

4. Hire competent property managers

There are better strategies than self-managed real estate if you aim to build an extensive portfolio of investment properties. This approach limits the number of properties you can manage effectively. It also imposes geographical limits on your investments; you are forced only to buy properties near you because they are easy to access. Hiring a competent property manager removes these limitations by helping you find the best way to pay rent online and other necessities.

5. Take advantage of tax benefits

Real estate investing is a team sport; you need seasoned professionals to help you make more money. You can increase profits immensely if you use an intelligent strategy that lets you shield your investments from taxes. By choosing investment locations and property types according to their tax benefits, you will defer taxes indefinitely while continuing to earn money on your investments.

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