How best to start kids to invest in RE.

[Kevin S.]

I am new to REI and started late in my life. But I have been thinking to involve my son sooner. He is 23 y.o and about to start full time job. He is interested in REI, has good basic knowledge on REI and has more than enough saved up for down but hesitate because of current market, interest rate, rental demand, capex, first investment jitters, draw of stock market, etc, etc. My thought is to help him out by going in 50-50 partnership for many reasons: half down payment, half capex expense, strong co-signer on loan, me being local to investment property to take care of little things that need attentions (he will be out of state for his job/I will have PM), etc.

1.  What's the best way to do this legally?  Do we need an attorney to draft a legal agreement?  Do we just have a written agreement between father-son (is there a viable legally recognized agreement online to use)?

2.   Should he be on the loan, the title of property, insurance coverage?  Should he be exposed to all liabilities that comes with it such as lawsuit, history of insurance claims(I believe insurance have a data base of past claims that can affect future coverage), credit and what not at an early age?  Or can he be just a silent partner with his money and I have a separate agreement (legally drafted of course) without him on the loan, credit, insurance policy etc.  He will benefit 50% from cash flow(if any), mortgage paydown and appreciation without all the exposure.

I would like to hear from investors who have their kids involved, accountants, CPAs, attorneys, realtors and all.  Thanks in advance.

[Ty Coutts]

Hi Kevin,

It's great that you're involving your son early in real estate investing! It's advisable to formalize the partnership with a legal agreement, ideally drafted by an attorney. While you can start with a written agreement, a professional document will help protect both of you, particularly in terms of ownership, responsibilities, and profit-sharing. You can structure it as an LLC or joint venture, which offers clearer tax and liability benefits.

Your son doesn’t need to be on the loan or title if he's a silent partner, and you can manage the mortgage, credit, and insurance. Just ensure your legal agreement details how you both share profits and liabilities. It’s also a good idea to consult a real estate attorney and tax professional to get the best structure for your needs.

Best of luck with your investment! If you have any more questions, feel free to DM me.