Real estate legacy planning: Why wait?

Truss Financial CEO talks about shifting from passive inheritance to new homeownership strategies for the next generation

Real estate legacy planning: Why wait?

The age-old American dream of homeownership is being redefined. With corporate entities emerging as dominant players and individual homebuyers grappling with both affordability and availability, the path to homeownership has never been more challenging.

As Jeff Miller (pictured) puts it, “The ability to acquire for somebody who just has a dream of owning a house is dwindling.”

There are simply not enough houses in the market. The stark reality is that many young adults can’t afford homes in these regions. Even those with the financial means often find no inventory available for purchase.

“It’s really scary, especially in these major markets,” said Miller, CEO of Truss Financial Group, a non-QM and reverse mortgage lender based in California.

Hardworking families are also finding themselves priced out of their hometowns after sending their children to college, Miller suggested.

“The children of our generation, they’re having to go out of state and move far away, and it’s a real challenge,” he continued. “We talk to clients all the time. They’re like, ‘Well, I think we’re gonna buy a home now in Iowa or Arkansas because that’s where my kids got to live because that’s what they can afford’.”

This shift in living patterns has led to a change in the traditional American dream. The once-common narrative of growing old in a paid-off home seems to be fading. Miller noted: “What everybody envisioned – I’m going to grow old and pay off my house - that almost seems non-existent.”

Instead, many are taking out large sums from their nearly paid-off homes to buy properties closer to their children.

Read more: Planning for the future in reverse mortgages

“And if they are close to paying [their mortgage] off, they’re grabbing $300,000 out so they can buy a house to live by their kids,” he said. “So yeah, it’s gonna be challenging.”

Corporate concerns

Perhaps the most significant revelation was the role of corporations in the housing market. Miller pointed out a concerning trend: “A huge percentage of the people buying houses right now are actually corporations.” These entities are snapping up properties in bulk, causing price inflation and depleting inventory.

Miller recounted a recent transaction in San Diego where a regular house received over 30 offers in just two days. Astonishingly, half of these offers came from companies specializing in fix-and-flip or buy-and-hold strategies.

“You feel bad for the homeowner that’s coming in there and wants to use an FHA loan, and they don’t have a chance,” Miller lamented.

The uphill battle for individual homebuyers is evident. With corporations offering all-cash deals, no contingencies, and a business-like approach to property acquisition, the dream of homeownership for many seems increasingly elusive.

“There’s no way the seller is going to go with that offer over all cash with no contingencies. I mean, it’s just ludicrous,” he said.

Miller clarified that many of these entities have significant lines of credit, with dedicated agents whose sole role is property acquisition. These corporations approach property buying as a business, making it nearly impossible for an average individual to compete.

“The difference is they’re treating it like a business, right? And the person competing with them is the everyday person buying a house for the first time,” Miller said. “That’s a losing scenario.”

However, amid the hurdles, Miller offered a potential solution for the next generation that challenges traditional notions of inheritance and financial support.

“Well, you know, another 25-30 years, you just get a reverse mortgage, then you can pay it all off then, right? I think that’s the exit strategy for this next generation,” he mused.

Reflecting on his own family, Miller shared, “My kids are like 15 and 13, and we can wait another 15 years and be there to say, ‘OK, we’ve got $50,000 to help you for a down payment.’ Or we could do the smart thing and acquire some properties for them now that can grow.”

Miller also emphasized a perspective he often shares with his clients: “Don’t die and leave them an inheritance, help them now and watch them benefit from what you’ve done. And get to enjoy it with them.

“It would be nice to take $100,000 and help my daughter get into this house, or my granddaughter gets into this house and I can go visit her and be stoked, versus I die and she gets $100,000.”

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