The first real estate investment transaction I was involved in came in my mid-twenties. My grandmother asked me to sell her home and nine investment properties that were all on the same piece of land. It was the mid-seventies.

My grandfather died when I was nine and never had the opportunity to teach me about real estate investing, so I don’t know the story of how they acquired this piece of land, what units were on it when they bought it and what they added to it. The only part I remember is that they converted their two-story home into an upstairs apartment and they lived in the downstairs. Boy, did I miss playing on the stairs. The other units consisted of three single family houses, a duplex and three trailers.

My grandmother died when I was in my early thirties and I never learned about real estate investing from her nor did I ask her about it. My parents never invested in any income property. So, nothing was passed down.

To say that my grandmother asking me to sell her property caused a lot of angst throughout all my aunts, uncles and older cousins would be an understatement. None of them wanted me to do it. They all wanted to hire a real estate agent; somebody with experience or anyone but me. They all tried to talk me out of it and that was just the beginning. She wanted me to sell it for her and that was good enough for me, so off I went.

So, remember this was the 1970s. I ran a classified ad in the newspa- per and put a sign in the yard. It didn’t take long to get an interested party and naturally, it was an investor. Who else is going to buy a piece of property like that. This is where it gets interesting.

The offer from the investor was for seller financing. They stated they needed some time to rehab some of the units, rent them and secure long-term financing. We negotiated a little and settled on the terms. Being that it was the 70s, the interest rate was really high, so getting some interest for a while seemed like a good idea to me. The investor claimed they would refinance within a year.

Once the “family” found out about the deal structure, you’d think I had conspired with the devil. Everyone was up in arms. I was just an idiot and had been outsmarted by the buyer. I was bombarded with reason after reason of why it would never work. Fun times. Now, I did understand that their hearts were in the right place and they wanted to be sure my grandmother, their mother, would be taken care of financially. I’m sure some of it was them worrying about their future inheritance. Well, the only opinion that mattered was my grandmother’s and she was fine with the deal, if I was.

Long story shortened, the investor made every payment on time and paid off the note in six-months. Everyone was happy or maybe just relieved. My idiot status improved, but only slightly.

There are a few lessons in this story. First, none of the family members with all the unsought advice had any real estate investment experience. That was a lost opportunity. My grandparents should have taught their children about real estate investing – the benefits of cash-flow and long-term wealth building. If that knowledge had been passed down, then my parents would have been able to teach me. Next, why didn’t that property stay in the family? To this day there is not a single reason I shouldn’t have found a way to buy it. Except, I didn’t know about real estate investing. It would be another seven years before I figured it out for myself.

The moral of this story is to teach your children well. Give them the benefit of your knowledge. Provide them the opportunity to control their own adult lives from the beginning. Show them how to create cash flow and build wealth. It is a precious gift that will be passed down for generations.

by Alan Langston