Category Archives: Business

The HBCUpreneur Corner™ – University Of The District Of Columbia’s Donna Shuler & Answer Title

Posted on May 18, 2015 by | Leave a comment

2014 Answer Title Logo - Trademark

Name: Donna Fitzgerald Shuler

Alma Mater: University of the District of Columbia (formerly DC Teachers College)

 Business Name & Description: Answer Title & Escrow LLC (Answer Title)

Answer Title – based in Washington, DC and serving Maryland, Virginia and the District of Columbia – is a full-service title and escrow company. We are a federal and local government contractor and trusted title and closing agent services provider for commercial and residential real property transactions. We also have experience as an acquisition consultant and closing agent for area commercial and affordable housing development teams. Our Answer Construction Management Services (ACMS) division offers site development and project management services with oversight of hiring compliance, project budgets, design/build, project closeout, and other construction management tasks with specific expertise in new building services, construction, and renovation.

What year did you found your company? 2004

Many do not know what title companies do or their role in real estate. Could you expound a bit on it? Before a property – commercial, residential, or otherwise – is sold or transferred, the title company makes sure that title is marketable and defect-free. The title company searches public records located in the local Recorder of Deeds and or courthouses to find the record owner of the property and identify any prior liens. They then conduct a title examination by taking the findings and making sure that no discrepancies are found (unsatisfied liens, taxes, judgments, rightful owner, etc.). If problems are found, the title company will try to rectify and clear them. Once everything is satisfied through the search and rightful ownership is identified, a commitment (to issue a title insurance policy) is prepared. The title company then coordinates the closing and:

  • Prepares a settlement statement listing closing and title insurance costs
  • Drafts deeds and all affidavits and other similar documents associated with the closing
  • Collects all funds needed to pay settlement costs including paying off any pre-existing mortgages on the property
  • Ensures that all documents are properly signed and notarized at closing
  • Issues the title insurance policy

Title companies are an important part of individual property sales, land transfers for development projects, and any real estate transaction.

The title industry seems to have a lot of fixed and regulated revenues. Some would say marketing and in large part customer service are the things that set companies apart. Do you believe that those revenues should be deregulated? What separates Answer Title from the rest of your competition? Preventing fraud and predatory lending are hot-button issues. Regulation is necessary to ensure that consumers have control of the buying process. Rules such as RESPA call for consumers to have all available information about the cost of a settlement and protect them from unnecessarily high settlement charges. This prevents agents in the industry from using things like kickbacks and referral fees to manipulate the market.

Marketing is important but the most effective marketing in our industry is past performance and expertise. Answer Title relies heavily on its expertise and reputation. The success of a development project (or any transaction for that matter) has so many moving parts and jurisdictional issues that it hinges on the participation of an experienced title company with the highest levels of expertise and knowledge of the local market – those are the elements that set Answer Title apart. We understand complex titles, condemnations, eminent domain procedures, and other land transfer issues. We are also well versed in affordable housing and first-time homebuyer programs. Finally, we are an experienced government contractor who understands compliance and deadlines and we have a number of small business certifications. So we have the residential, commercial, and government sectors covered.

African American homeownership and land ownership seems to be heading back toward all-time lows and African American commercial real estate ownership is largely unknown. What do you believe a corporations like yours; African American banks, and other African American companies related to the real estate industry can do to reverse these trends? More community outreach starting when students are still in school. Banks and agents should use more images of African Americans in their marketing. Organizations like Freddie Mac and Fannie Mae should formalize partnerships with agents in our communities.

African Americans in the real estate industry seem to be largely concentrated as real estate agents, but not in many other parts of the industry making it hard to begin to circulate capital even within the African American real estate ecosystem. What do you think this lack of ownership and occupational diversity in the industry is a result of? And what would it take to improve it?

  • Segments of the industry are so closely linked that large players such as developers start their own ancillary firms – title and escrow, property management, etc. Similarly, government agencies and large corporations do not distinguish between large real estate developers and related services, entrusting the range of services that one large business/entity. This creates fewer opportunities. Nevertheless, organizations such as AAREP, NAREB, etc. provide valuable networking and business development opportunities for African Americans in the industry.
  • We just have to continue identifying ways to participate across all occupations and identify connections. Bankers and lawyers (such as myself and my business partner) looking at opportunities in the title industry, for example.

What was the most exciting and/or fearful moment during your HBCUpreneur career? Answer Title has won awards and recognition at major events and I realized that I am still not comfortable speaking in front of large audiences – that is still a fearful moment. Becoming the first African American female CEO of a bank in the District of Columbia was exciting. Also, I am always excited at closing when we make people homeowners and hand them keys. I know how life-changing that experience is.

What made you want to start your own company? Having worked in banking with strict rules and guidelines, I knew that I could transfer my real estate skills to the title industry and have more control.

Who was the most influential person/people for you during your time in college? My father, William B. Fitzgerald, who started a DC-based bank in 1968 was influential during my time in college and my lifetime. He was a self-made man who owned a real estate company and wanted to meet the needs of his clients who had been unable to get mortgages and financing. As a young girl I watched his vision come to fruition and grow into the fourth largest minority-owned bank in the US – a bank that was featured in Black Enterprise in the 80s and 90s.

Donna Shuler 2015 Photo for HBCUpreneur

How do you handle complex problems? I believe in researching an issue and weighing my options. Also, it helps to have the input/perspective of a business partner.

What is something you wish you had known prior to starting your company? New businesses should place more emphasis on (and devote more capital to) marketing.

What do you believe HBCUs can do to spur more innovation and entrepreneurship while their students are in school either as undergraduate or graduate students? Specifically: initiatives such as campus-wide business plan competitions; on-campus business development centers and institutes that teach and develop the tools of business ownership; Entrepreneurship courses (such as Entrepreneurship undergrad course and Entrepreneurship MBA concentration at Howard University); host technology and other innovation industry events on campus specifically through local partnerships; invite alumni entrepreneurs to participate as speakers, mentors, program sponsors, etc.

Generally: In all classes, address the legacy of business ownership among HBCU graduates across all disciplines. Use examples of African American entrepreneurship whenever it relates to a particular topic. Expose students to the history of business ownership in their own communities.

How do you deal with rejection? I want to know why I was rejected and use that information to move forward.

When you have down time, how do you like to spend it? With family and golfing – or with a good book.

What was your most memorable HBCU memory? Having outstanding professors who were from the community and cared about the community made for many memorable experiences. Professors who were accessible and nurturing unlike at larger non-HBCUs were important to my success.

In leaving is there any advice you have for budding HBCUpreneurs?

Balance fearlessness with preparedness.

Also, not being successful in every endeavor only makes you wiser and stronger for the next venture so keep trying. Life is truly a journey – enjoy it.

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2015 HBCU-Based Credit Unions: Alabama A&M’s Councill Credit Union Leads A Weak Pack

Posted on March 18, 2015 by | 2 comments

Opportunity has power over all things. – Sophocles

CFCU

(Pictured Above: Councill Federal Credit Union at Alabama A&M University)

The release of the second annual HBCU Money African American Credit Union Directory allowed us to uncover two more HBCU-based credit unions. A total of eleven HBCU-based credit unions that control a combined $87 million in assets and have 17 099 in members. For comparison, Navy Federal Credit Union, America’s largest credit union has $63.7 billion in assets and 5.3 million members. Three years ago, I wrote on what forming a national HBCU credit union would look like and why it should be a reality. As it turns out, much of the infrastructure for this reality is already in place. Now the question is, what is holding us back?

  1. Southern Teachers & Parents (LA) – $28 million ($29 million)
  2. Florida A&M University (FL) – $19.6 million ($20.6 million)
  3. Howard University Employees (DC) – $11.3 million ($11.4 million)
  4. Virginia State University (VA) – $9.6 million ($10.6 million)
  5. Prairie View (TX) – $4.8 million ($5 million)
  6. Savastate Teachers (GA) – $3.6 million ($3.6 million)
  7. Councill (AL) – $3.4 million ($3.1 million)
  8. Xavier University (LA) – $2.4 million (N/A)
  9. Arkansas A&M College (AR) – $2.3 million (N/A)
  10. Tennessee State University (TN) – $1.4 million ($1.4 million)
  11. Shaw University (NC) – $0.5 million ($0.5 million)

If the eleven merged it would the eleventh largest credit union by assets and by members, and would be only the second African American financial institution with a national footprint. The other being OneUnited Bank, which covers Massachusetts, Florida, and California.The lack of products at HBCU-based credit unions continues to be a chief complaint of why so little deposits seem to remain in them. Everything from better web-presence, mobile banking, investment products, and small business loans could be rolled out in scale if the eleven merged.

Instead, six of the nine HBCU-based credit unions we reported from last year saw their assets drop. Median and average assets fell 1.7 percent and 1.4 percent, respectively among last year’s group of nine. In terms of membership, membership also declined in six of the nine HBCU-based credit unions as well. Membership overall fared into the red with median and average membership down 2.3 percent and 6.3 percent, respectively. Two trends you want to desperately avoid if you are any institution. The best performer was Councill Credit Union at Alabama A&M University who saw an increase of 8.5 percent in assets, this despite the second worse drop among the group in membership decline with a 17 percent drop. Tennessee State University’s Credit Union had the largest increase in membership with a 6.3 percent increase from 2014. However, it only resulted a 1.7 percent increase in assets. One of only three HBCU-based credit unions to see an increase of any sort in assets from the previous year so I guess the cup is half full if you want to see it as such.

Unfortunately, there also seems to be no urgency by these credit unions to do the things necessary to increase their membership and assets. Students entering into HBCUs today may be more financially illiterate than a generation ago, but they have more complex financial needs thanks in large part to student loans playing such a large role into today’s higher education finance. Not to mention the reduced role that social security will play in their long-term retirement planning. An issue that should be prompting more HBCU-based credit unions to find ways to help students reduce student loan debt and start retirement planning while in college. A hard task to give this group given the limited financial products and services they offer leave HBCU-based credit unions minute opportunity to serve the needs of students, faculty, campus organizations, or even the HBCUs themselves. These limited products and services are largely an issue of lacking scale. Instead of a credit union with at least $87 million in assets, the median is $3.6 million amongst eleven with declining assets and membership. Instead of students, faculty, and institutions who travel more today than ever to conferences, tournaments, etc. being able to access their money at one of the eleven branches or through mobile app banking along the way, they are limited to just one insular branch with technology that at best reminds you of AOL dial-up. Holding onto students is even more difficult with most returning to their hometowns or nearest major city upon graduation and only returning to the campus at most once a year for homecoming. Incentive to keep banking beyond graduation? None.

Lauryn Hill has a wonderful song called the Ex-Factor that I think often describes African America institutional strategic behavior and with HBCU-based credit unions it seems no different. “It could all be so simple, but you’d rather make it hard. Loving you is like a battle and we both end up with scars.” I still believe with the right vision, an HBCU credit union could rival the Navy Federal Credit Union and give African America a place of financial safety instead of the scars we constantly end up with from predatory financial services that come into communities because we are left with such meager choices from our own financial institutions. It really all could be so simple, but more than likely we will continue to make it hard.

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Buy Mediterranean Before Boardwalk: Real Estate Investment Lessons From Monopoly

Posted on February 24, 2015 by | Leave a comment

Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth. – Robert Kiyosaki

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For all those who have played Monopoly at anytime in life there is one thing for certain, Boardwalk holds an allure that most players simply can not resist. Me and my former roommate would often play the game and on the first few trips around the board as players are snatching up everything they land on, it became apparent to me that I was getting cash poor quickly and so was she. There was no liquidity strategy for either of us. I decided to change my approach and the key to that approach was to not buy Park Place or Boardwalk unless I needed to defensively prevent her from obtaining a monopoly. Even if she had obtained one of the properties I may not buy the other depending on her cash position. A tip in Monopoly, keep your money under the table.

boardwalk

The great sin of Monopoly and many beginner real estate investors is that they do not actually purview the reality of what they are starting with in relation to what they will potentially be buying during the game. Each Monopoly player starts with $1,500. Just a quick examination of why Boardwalk makes no sense for a period of time is that it cost $400 or almost 27 percent of your starting cash position. On each trip around the monopoly board there is a 2.5 percent chance you land on any one square. It would take your competition eight trips around the board before your property paid you back landing on it every single time just to get that money back. Now, let us say you get lucky and land Park Place as well, that is $750 or half your starting cash position to land the Ritz Carlton and Fifth Avenue equivalent. The problem is to get any true value out of them you need to develop them. To get them up to hotel level you first have to build four houses on each which are $200 a piece and then finally a hotel. You can not just build on one property in Monopoly. So if you put one on Boardwalk, then you have to put one on Park Place next. To get both properties up to hotel level it cost $2,000 or 10 trips around the board. In exchange, both properties now give you a 5 percent chance of landing rental income of $3,500. On the flip side, if you were to buy all five “cheap” properties of Mediterranean, Baltic, Oriental, Vermont, and Connecticut and develop them up to hotel level it would cost you $1,690 and give you a 12.5 percent chance for $2,400 in rental income. Again, think about where you are starting. In comparison, you gave up half your cash position to acquire Park Place and Boardwalk, and then need to circle the board at least seven more times to get to hotel level. Whereas for MBOVC properties, you can acquire and build all of them with your starting cash and one trip around the board. By the PPB owner’s sixth trip, you have had the potential of generating $14,400 in rental income at over twice the opportunity that they have, and in the process they will be potentially cash strapped. You on the other hand, just on passing go six times will have accumulated $1,200 in income, not including potential rental gains.

mediterraneanavenue

So how does this play out in the real world? Many start up real estate investors are just not honest with themselves. They want to buy properties that endanger their cash position and not add to it. There are really two types of investment properties in real estate regardless of whether it is commercial or residential; they are cash flow or appreciation. Cash flow properties tend to be the MBOVC properties. They offer little in the way of appreciation, but kick off enormous amounts of cash. On the flip side, PPB are appreciation properties, meaning the cash flow on them will be tight (maybe negative), but over the long-term the property will rise appreciably in value. The problem with the latter for start up real estate investors is that nothing can go wrong. Razor thin margins (if any) means that maintenance and repairs are all coming out of your pocket instead of the properties revenues. In a cash flow property you are looking to keep it standing and functional as opposed to a Miss Universe competition. As such, even basic repairs and maintenance can be kept up with the revenues of the property because of the acute profit margins.

So what are MBOVC properties? It is all relative to your own starting cash position. Things you should keep in mind are how much is your current income, financing options, down payments, estimated repairs and ongoing maintenance, and taxes. In essence, these are properties that will not strain your cash position and have high profit margins. If you can purchase and repair the property and still have a 100 percent profit margin, then that is the bulls eye. Often these are properties that have Section 8 potential or Class D multifamily properties. The latter are usually in low-income and working class areas where tenants have higher eviction rates, more likely to pay rent in cash/money order, and where maintaining a quality standard of the property will not be costly.

Given the rise of renters in the United States with credit still very tight for potential home buyers’, there is a sweet spot available for investors who can offer affordable housing, especially among millennials saddled with student loan debt. Les Christie of CNN Money reports, “The median rent for all types of rental homes hit $1,350 a month in March (2014), up from a median of $1,285 a month 12 months ago, Trulia reported.” You may have to search smaller towns with growing demographics or areas of the big city that are hidden gems, but still offer an affordable purchase option. Thinking outside of the box of where you purchase your rental properties is key. It may be in a small town in Arkansas, but wherever it is be sure you do your homework and not be afraid to take on a project.

sony

Cash is king, as my entrepreneurship teacher Charles Reed would always say and without it you are out of oxygen in business. In Monopoly, I would often buy the red, yellow, and green properties, but would not build on them unless someone landed on my MBOVC properties. This allowed me to grow and keep my cash position sound in case I had landed on someone else’s property. These lessons are the same I am applying to my rental property portfolio. Maybe one day I will own or build a Boardwalk property like the NYC Sony Building (pictured above) where a triplex in the building is on the market for a record $150 million and probably would fetch easily $800,000 to $1 million per month in rental income. Monopoly, it is just a game, but take heed to its lessons and you may just win in real life.

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Two African American Banks Fail To Begin 2015

Posted on February 18, 2015 by | 2 comments

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The African American banking system suffers major setbacks to begin the year. Highland Community Bank (press release below) which had assets of approximately $73.4 million 2013. The bank was founded November 09, 1970 in Chicago, Illinois. Over the past two years it witnessed double digit asset declines on its books.

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Also seeing its doors close is Capital City Bank & Trust Company in Atlanta, Georgia. Capitol City, was the ninth largest African American owned bank, with $291 million in assets or 5.7 percent of African American bank owned assets. The bank was only 20 years old, meaning it had seen explosive growth in its short time.

These two closures reduce the number of African American owned banks down to 23 ahead of the HBCU Money’s 2015 African American Bank Owned Directory release, and a combined loss of 7.2 percent of African American bank owned assets. For perspective in 1994, there were 54 African American owned banks.

For the FDIC’s Failed Bank List click here.

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Four HBCU Cities Among List Of Best Startup Cities In America

Posted on February 10, 2015 by | Leave a comment

“No disrespect to San Francisco or Brooklyn, but we wanted to identify the next wave of cities building an ecosystem to turn innovators into entrepreneurs.” – Poplar Mechanics Editors

It is no secret that if HBCU citizens are going to close the wealth gap for their families and institutions, then it will happen through enterprise. Fifteen of the twenty wealthiest people in the world on Bloomberg’s Billionaires Index have their sources of wealth noted as self-made. A term that many would argue could have a broad interpretation. For instance Jeff Bezos, founder of Amazon with a net worth of $33.1 billion, received a $300 000 loan from his father to launch his company. A reality that is unimaginable by well over 95 percent of HBCU citizens and their families. According to Statista (graph below), of the 9.63 million households in America that are millionaires, excluding their homes, only 8 percent are African American or 770 400. With approximately 15.5 million African American households that means the chance you have of having parents who can write you a $300 000 check is approximately 5 percent at best. 

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However, having familial money is not everything when it comes to startups today. It helps a lot definitely, but there are other variables that are vital as well. What is the ecosystem for business like in your city? Is there a cluster of entrepreneurs? The old adage that iron sharpens iron would be very poignantly applied here. Part of Silicon Valley’s success is because of the number of ideas flying around nonstop. The hardest thing to find in Silicon Valley is someone who is not an entrepreneur, but a recent article in Popular Mechanics suggest that there are a budding number of hot spots across the country for startups. A term that should not just be confused with technology companies, although it has become almost synonymous with them and Silicon Valley.

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The first is St. Louis, Missouri which ranked number one overall in the article, home of Harris-Stowe State University. Recent reports have Harris-Stowe just above 1 700 students. The city has been struggling to revive its population (graph above) over the past 45 years, with an almost 50 percent decline in population this new startup boom could be just what it needs. So how is the city turning itself around? By returning to its entrepreneurial roots and reinventing itself or as Popular Mechanic editors put it, “St. Louis is a place where people come to make things—always has been. It was founded by enterprising fur traders and thrived on the wealth of railroad barons and beer moguls.” After the Great Recession that saw the city’s flagship company Anheuser-Busch sale itself off, the city took a step back and reinvented itself, “From 2011 to 2013 the ecosystem supporting entrepreneurs more than doubled in size with the launch of eight makerspaces (shops with tools like 3D printers and laser cutters), accelerators (early-stage investors and mentors), and coworking spaces (a shared office for startups, with low rent)”. The city and St. Louis Chamber of Commerce is really getting behind the movement, backing such startup hubs as T-Rex, which revitalized an 80 000 square feet 1898 building that gives startups a place to put down their initial roots. One of T-Rex’s tenants that Popular Mechanics highlights is from a local university, “Betaversity, the brainchild of biology student Blake Marggraff, 22, and two of his associates. The company’s main product is the BetaBox Mobile Prototyping Lab, a work space with 3D printers, laser cutters, CNC routers, and more—all cleverly wedged into a shipping container.” It appears that the Gateway Arch is shining itself up for its second act.

Number five on Popular Mechanics list of best startup cities in America was Baltimore, Maryland. It is home to three HBCUs. Coppin State University, Morgan State University, and Sojourner-Douglass College all call Baltimore home. The institutions between them are home to almost 12 000 students. According to Popular Mechanics, “One thing that helps all startups in Baltimore—a low cost of doing business, including reasonable rents.” A low cost of business is vital, especially for African American entrepreneurs who are not likely coming from deep family pockets or may lack access to capital via investor networks or bank loans. Under Armour, which was launched in Baltimore three years after graduation by former college football player Kevin Plank. It has grown to become one of Nike’s thorns in less than twenty years and has made Plank a multi-billionaire. It has also allowed him to become one of his colleges biggest donors and boosters. The city has also produced two notable HBCU owned media companies. One, Carter Media Enterprises founded by Morgan State University alumnus Jarrett Carter, Sr., owns HBCU Digest and has been at the vanguard of a new generation of HBCUpreneurs. The city’s Emerging Technology Centers also has been vital according to Popular Mechanics, “In 15 years the business incubator and accelerator has aided more than 350 companies that have attracted $1.6 billion in investments.” In other words, Baltimore is booming.

HBCUs and the cities they are in must and should take similar steps to creating incubators within their town. Baltimore HBCUs really have an opportunity to make a splash with 12 000 students if they created a joint incubator. Schools like Texas A&M have even gone so far as to start a program called Startup Aggieland, which  per their website, “student startup offices and co-working spaces for student collaboration, as well as free business resources, professional training and networking events.” The university does not take any equity in these businesses or their intellectual property, but by offering them the space they know if any of them are successful there is a strong chance that these students will become high-quality or transformative donors. Something all HBCUs desperately need. It also gives these students work experience before graduations, which is becoming even more of an issue for many graduates entering the work force.

These incubators and ecosystems must also take advantage of geographic and academic strengths. HBCUs in the DMV should be focused on government and defense related entrepreneurship or more specifically in Baltimore, the STEM research being conducted at America’s largest research institutions, John Hopkins. Nosy around and see what research they are developing that may have commercial application. Or if your HBCU is an 1890 school, focus on agricultural businesses. Gulf coast HBCUs should definitely be looking at aquaculture given its recent boom. Again, we have to push this as not only important, but absolutely strategically vital to our long-term survival and success.

From big cities to small towns, HBCUs should be engaged with their civic counterparts to see how they can create opportunities for their students to engage the role of owner, founder, and entrepreneur. It is vital that we create a stronger HBCU private sector that can grow enough companies and actually provide wealth creation, more immediate employment for graduates, and opportunities to start their own companies. It is also crucial that alumni play a role in this as well. Either through creating an endowment that can give the school monetary funds to award to students who engage in on-campus HBCUpreneurship or if they are HBCUpreneurs themselves providing time to mentor budding HBCUpreneurs at their alma mater. Capital is ultimately the KEY component that can unlock a lot of HBCU startup potential. Without it, these are just fancy cars parked in the driveway with no gas. We beat this horse constantly, but this is where the advent of the HBCU Credit Union would be extremely vital in HBCU startups accessing capital.

At this points we have three options: innovate, stay on life support, or die.

The other two HBCU cities on the list: 

Detroit, Michigan, home of Lewis College of Business, ranked number thirteen on the list. An HBCU and city badly in need of a makeover.

Austin, Texas, home of Huston-Tillotson College, ranked number fourteen on the list. An HBCU that sits in the looming shadow of the state’s largest public institution. Dell is based there and Twitter made its public debut at the SXSW Interactive festival that is held annually there.

 

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