A Family Collective Model for Wealth Accumulation: Foundations and Implications In environments where a wage-only trajectory often stalls, a family-based collective approach offers an alternative path to building significant wealth. By pooling resources across generations, optimizing legal vehicles, and leveraging mortgages, a single minimum-wage earner can become a multi-property landlord within a decade. This model rests on several well-established economic theories, recalibrated for common-law contexts (LLCs, family trusts, U.S. mortgages, U.K. buy-to-lets, etc.).
1. The Household as a Production Unit (Gary Becker)
Theory: Becker’s household economics treats the family like a mini-firm that allocates time and resources to maximize intergenerational welfare.
Application: Parents offer rent-free accommodation to the young adult—effectively an “in-kind” capital contribution—freeing 100 % of their income for investment.
2. Life-Cycle Inversion and Mortgage Leverage
Traditional Model: Modigliani’s life-cycle hypothesis assumes high consumption in youth and saving later.
Inverted Model: By living rent-free, the young adult uses parental guarantees to secure a mortgage (U.S./U.K. residential loan) for a first property. Rental income covers debt service, enabling rapid reinvestment in a second, then third home.
3. The r > g Mechanism (Thomas Piketty)
Insight: When the average return on capital r exceeds the growth rate of incomes g, capital owners pull ahead of wage-earners.
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