Step-By-Step Guide To Helping Your Kids Become Financially Independent Through Property Investment

For many kids, the great Australian dream of owning a home will be unattainable. If you can help you kids get ahead and build a property portfolio, you will help them become the fortunate few who can make their dream a reality. To help you along the journey, we’ve curated a step-by-step guide to help your kids become financially independent through property investment. 

Step 1 – Education

All kids are different. While some will want to invest as soon as possible, others won’t think much beyond Saturday night. It is up to you to determine when the right time is to start teaching your kids about money, and investing for their future as their parents.

For most, the right time to start investing is early to mid-twenties or straight after university when they have taken on their first career job. This will give them enough time to build a property portfolio and gain enough equity to purchase their home. It can take many years for investors to reap significant rewards from property investments since they are long-term strategies. It is important that you teach your kids this. If they only start taking their financial future into their own hands in their thirties, they will be behind their peers who took the leap much earlier.

For the best ways to teach your kids about money and help them get started in property investment, you can access our wealth of resources.


Step 2 – Leading By Example

Establishing your own property portfolio is one of the best ways to teach your kids about money and property investment. Your kids will benefit from the experience you gain, and the additional equity you build will help them get off to a great start. If you haven’t yet invested in property yourself, get started by:

• Educating yourself – either research and teach yourself or get a property investment coach.
• Assessing your capacity to invest – what is your current financial position and borrowing capacity?
• Building a plan – how much will you need to generate from your portfolio to meet your financial goals and how are you going to do it?
• Start building your portfolio.



Step 3 – Develop A Joint Venture Plan With Your Kids

It is very important to develop a plan and be very clear on expectations with your kids before you enter into a financial arrangement with them. Entering into any sort of financial agreement with your family requires careful consideration. The last thing you want to happen is for there to be a misunderstanding around the terms of the arrangement which could not only impact your finances but could also create a rift in the family.


As a start, be very clear on your expectations by documenting a plan:

What is your expectation of your kids if you give them a head start? You are unlikely to be helping your kids financially so they can sell their properties in a few years and blow all of their money at once. It is important to be clear that you are helping them to get ahead, so therefore you may have an agreement that any money generated from their investment portfolio must only be used for buying future investments or to purchase their own home eventually.



Step 4 – Setup A Master Facility For The Kids

A Master Facility is a type of account where you can transfer a portion of your equity to help your kids cover the deposit and establishment costs of their property. Your kids will also use this account to manage ongoing cash flows for their investment portfolio. 



1. Your portfolio is standalone: By releasing your equity into a master facility, you make funds more available. These can be used for the establishment costs for new investment opportunities. This way you do not need to cross-collateralise your investment properties to your home which is not recommended.

2. Your cash flows are protected: All the rent and tax deductions are paid into the master facility and all the expenses are drawn out of the facility. You don’t need to contribute any of your own funds provided you have a buffer in the facility.

3. Tax effective: Using the one account to manage only the cash flows and expenses on your portfolio makes it very effective for taxation purposes.

4. Portfolio management: Having the one account that manages all your cash flows and holds all your releasable equity makes it much easier to manage your portfolio.

If you would like to find out more about setting up a Master Facility and how to teach your kids about money through property investment, simply click on the link below and fill out the form to book a complimentary strategy session with one of our seasoned Property Wealth Planners!



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