Keeping it in the Family: Building Generational Wealth

As many Americans are facing evictions, others are in danger of losing their homes due to job loss following the COVID-19 pandemic. According to the U.S. Bureau of Labor Statistics, unemployment rates were 10.2% in July 2020. People are searching for new ways to earn income through side jobs and entrepreneurship to carry the financial responsibilities for their families. Some have even moved in with family members due to the loss of income. Though the idea may seem inconvenient, combining resources with other family members could be a way to build generational wealth.

Although the coronavirus has created an economic crisis in the United States and globally, homeownership rates in the United States have increased in 2020. In the second quarter of 2020, homeowner rates increased to 67.90%. Land and property ownership is one of the most popular avenues for building wealth to pass down to other family members.

Vincent Brown knows the importance of homeownership and what it means to his family. “My mother had nine children and when she died, her home was left to all of us”, Brown said. Sharing the responsibility of a mortgage between family members is cost effective and also likely guarantees that the property stays within a family.

A downpayment on a house or on a lot of land can vary between 3% and 20% depending on the listing price. The cost of that downpayment split amongst a family of four can be cost effective and help to avoid high interest rates for an individual attempting to purchase on their own. Four family members purchasing a $100,000 home would each contribute about $5,000 for a 20% downpayment. The family members could choose to use the home as a rental property or keep it as a residence, while each contributes to the monthly mortgage payment.

Building generational wealth is important to many individuals with children or younger family members. The need to have ownership in property is still a major priority to those who are facing financial difficulties during the COVID-19 pandemic and even before. While the threat of an economic depression may seem like a risky investment, combining resources with family members can be a way to achieve the goal of homeownership.

Vincent Brown contributes the combined family effort to preserving his family’s legacy. “We all chip in to keep up with the maintenance of our home, so when we pass on, we will leave the home to our children.”