What Parents Should Consider When Leaving A Minneapolis Duplex To Their Kids
At some point, nearly every real estate investment book or podcast suggests the listener or reader build a portfolio of investment property and leave it to their children as a means of building long-term, multi-generational wealth.
This is a wonderful idea. However, the “experts” always seem to forget a couple crucial flaws in this plan:
- The kids don’t want the property. They want their own.
- It’s a pain in the behind to deal with.
Speaking from both personal and professional experience, if a duplex investor is lucky enough to have children who are interested in continuing the family real estate tradition, odds are high they either don’t live anywhere near the family’s property, or have always wanted to own in another part of town.
Over the course of my career, I’ve spoken with countless would-be duplex sellers who have children who live on a coast, or even on the other side of the metro. The would-be sellers make no secret of the fact they hope their child will move closer to home, and then the property will be “perfect” for them.
Trouble is, the adult child has their own live and priorities.
For example, my dad was a real estate investor. When he passed away in 2017, I and my siblings drove 80 miles each way once a week for 5 years to deal with his portfolio. While we knew it was a blessing, it nonetheless interrupted our lives and businesses.
We are not alone. In fact, a recent client had a family-member leave him a battered duplex two hours from his home. The heir just wanted to be done with the property, regardless of price. However, a belligerent tenant who gave notice and then refused to leave forced the seller to hire an attorney and learn about evictions.
I just keep reminding him the inheritance was intended to be a blessing, not a curse.
There are alternatives for Minneapolis and St Paul duplex owners to leave a less painful real estate legacy for their heirs. That may include selling and performing a 1031 exchange into a Delaware Statutory Trust as part of finalizing an estate plan. It may involve exchanging into properties the heirs select and selling it to them on a contract for deed with favorable terms.
Or, it could be as simple as having an honest and frank conversation with our heirs as to whether they’re up for the task. If so, make sure everything is in writing as to who to call, where they can find copies of the leases, and making sure the property is in good shape for a quick sale in the event that’s what their preference is.
By planning ahead, we can help make sure the wealth we’ve worked so hard to accumulate through real estate investment truly is a blessing to pass on to the people we love.