We all want to ensure success for our children and grandchildren, while instilling a resilience that will last for decades to come. In today’s economic climate, to help build wealth that is transferrable for future generations, rather than investing in a volatile stock market, real estate – particularly multi-family, is likely to be a more stable option.
For example, throughout recent history, real estate investments have proven to be successful in building family wealth. Around 70 years ago, the Hilton family led innovations in this market sector. Conrad Hilton purchased a 40-room hotel after getting out of the army and working at his father’s general store. Later, in 1954, he purchased the Buffalo Statler Hotel for $111 million – the largest real estate purchase ever made at that time, which led to more purchases and the creation of the world’s first international hotel chain. When Conrad passed away in 1979, one of his sons started a new real estate firm, and the other son took over the family hotel business, until Hilton Hotels sold for $26 billion in 2007.
Today, that wealth generated from Hilton Hotels continues to benefit Conrad’s family, in addition to its charitable organization, the Conrad N. Hilton Foundation. Since that time, hundreds of others have used that same business model to invest in properties and generate wealth, including John D. Rockefeller, who held assets equaling 1.5% of America’s total economic output in 1937.
Typically, real estate investors use multi-family investments to generate passive income, which often helps fund their children’s college and their own retirement. After they die, they leave behind those income-producing properties and their heirs continue to reap the benefits.
Also, unlike single-family home investors, multi-family investors usually have a company handle property management. Time-savings and cost-savings are abundant, as the investing family can live their lives, while reaping rewards from their financial contribution. Here are some of the services a reliable property company can handle for your investment: insurance, trash removal, pest control, cleaning, property management, leasing, marketing, new and refurbished appliances, carpet and flooring, laundry leasing, and all other third-party maintenance.
In addition, multi-family properties generally have a higher cash flow and returns on investment than single-family home investments. One reason is because ownership of multiple units allows for cash flow, even when one unit is between tenants.
Overall, the profit generated from your investment depends on the dollar amount you are willing to invest, along with property upkeep, which is usually taken care of by your property company. Unlike the volatile stock market, investing in property allows for more predictability. Depending on how you play your cards, your investment could reap benefits for future generations within your family, for years to come.