Category Archives: Real Estate

Texas Southern University Host NAREB’s Black Homeownership Summit

“We need to intentionally invest in health, in home ownership, in entrepreneurship, in access to democracy, in economic empowerment. If we don’t do these things, we shouldn’t be surprised that racial inequality persists because inequalities compound.” – Pete Buttigieg

On the campus of Texas Southern University on November 4th and 5th, the National Association of Real Estate Brokers, an organization representing the interest of African American real estate professionals, hosted a homeownership summit with focuses on not only homeownership, but also student debt, access to credit, and investing. The importance of such an event being held on an HBCU campus can not be understated.

Intertwining African American institutions with each other has long been a struggle for the community’s development with African American institutions often operating on islands instead of a connected ecosystem. Events like NAREB’s Black Homeownership Summit at Texas Southern University helps highlight the power, potential, and scalability of what happens when African American (and Diaspora) institutions work together. What better place to address Black homeownership after all than on the campus of an HBCU? Soon to be African American graduates and professionals will be at the vanguard of trying to close the acute homeownership crisis that African America continues to face (graph below).

One of the keynote speakers at the NAREB Black Homeownership Summit event was Teresa Bryce Bazemore, CEO and President of the Federal Home Loan Bank of San Francisco, speaking exclusively to HBCU Money about the event said, “We need all the parties in the housing finance industry and other stakeholders to collectively work to eliminate the barriers to homeownership. In this new environment, all consumers including Black and Brown people should be able to participate equally in the dream of homeownership. We need initiatives that can help potential buyers with improving their credit, saving for down payments and understanding the entire home buying process from A to Z. We also need to make sure that the lending rules are equitable.”

HBCU Money’s Suggested Five Initiatives For HBCUs Can/Should Be But Not Limited Too:

  • Making financial literacy a mandatory part of matriculation for HBCU students. This can be done through the financial aid office, workshops, or a class.
  • Providing HBCU students work study jobs that go into the community at African American K-12 schools and teaching financial literacy.
  • Partnering with African American owned banks and credit unions. Due to their deposit bases, many African American owned banks and credit unions simply can not participate in the primary mortgage market and there are few to none African American owned non-bank mortgage lenders. This leaves the African American community in an extremely vulnerable position to predatory lending as has been demonstrated and shown time and time again. HBCUs are a key to growing assets within African American financial institutions through students, alumni, and institutionally.
  • Offering more scholarships for ALL students. Scholarships are purposed to reduce student loan debt, but they are often resigned to high achieving students despite the majority of students being in the middle. This becomes highly problematic for African Americans who usually do not have the familial wealth to assist in paying down or off their student loan debt. HBCUs while cheaper than our PWI counterparts on the whole could be doing even more to reduce the student loan debt burden for African American students by ensuring that any student who is academically eligible has an opportunity to reduce their student loan debt burden. This provides an opportunity upon graduation that more of their initial paycheck is going towards wealth building and potential homeownership rather than debt burden.
  • Encouraging the use of startups like HBCU Real Estate, who has part of their mission statement to use a portion of their profits to provide down payment assistance for HBCU alumni who seek to purchase primary or investment properties.

Homeownership and real estate ownership have long been a cornerstone to establishing generational wealth in the United States. Despite this, the African American homeownership has never crossed over the 50 percent threshold and according to MarketWatch and has always maintained a 20-30 percentage point gap between African and European Americans. African America’s civilian noninsittuional population as of October 2021 was 33.7 million and its civilian labor force is 20.6 million and the African American labor force 20 and over is 19.9 million. Assuming that 44 percent of the 19.9 million are homeowners (8.7 million), it would take approximately 1.5 million more African Americans to become homeowners to get African America above 51 percent. Based on the most recent data provided by Zillow, the typical value of U.S. homes is $308,220 as of September 2021. Between 1999 and 2021, the median price has almost tripled from $111,000 to $308,220. This means in order for those 1.5 million to acquire homes they would need down payments of approximately $16.2 billion using FHA’s 3.5 percent down financing or $10,800 per potential African American homebuyer. While it does not on the surface seem like a lot to many, that number represents almost 45 percent of the African American median net worth, but a mere 6 percent of European American median net worth.

Just for perspective on that $16.2 billion, there are no African Americans with a net worth more than that, but there are 45 Americans whose single net worth exceeds $16.2 billion. The road to achieving more African American homeownership will be no small task, but events like NAREB/Texas Southern will go a long way in us doing the hard work together, lifting the heavy load together, and ultimately achieving our goal together.

Alabama A&M University Students Standout At APA’s 2018 National Planning Conference In New Orleans

“Without leaps of imagination or dreaming, we lose the excitement of possibilities. Dreaming, after all is a form of planning.” – Gloria Steinem

This year’s American Planning Association in New Orleans was a success for both the organization and for the exposure that a set of Alabama A&M University students (pictured above) received who were in attendance.

American Planning Association’s history dates back to 1978 when the American Institute of Planners and the American Society of Planning Officials merged and decided to move forward under a united banner with the aim of, “organized exclusively for charitable, educational, literary and scientific purposes to advance the art and science of planning and the activity of planning — physical, economic, and social — at the local, regional, state and national levels.” Today, the website states that the organization’s current vision revolves around, “provides leadership in the development of vital communities by advocating excellence in planning, promoting education and citizen empowerment, and providing our members with the tools and support necessary to meet the challenges of growth and change.” Something that is a vital exploration of HBCU towns and surrounding communities who are often highly undeveloped.

Alabama A&M, located in Huntsville, Alabama, like many rural HBCUs is a flagship institution in the halo geography of its location. Huntsville is home to almost 200 000 residents along with a strong NASA presence. affordable housing, the future for Huntsville could be extremely bright – and therefore Alabama A&M impact on the area could also be . However, who will ultimately play a role in shaping Huntsville’s future? Hopefully, with a strong planning program like the one being developed at AAMU, it will be their alumni who will sit in public office and private firms and shaping the future and influence of the city. Ultimately, a benefit to the institutional capital of Alabama A&M University.

The APA annual conferences and workshops provide intellectual discourse on what is shaping communities is often attended by the who is who among public and private interests looking to get a glimpse into the future of how to provide the assets that will allow them to continue to grow and flourish. Given that HBCUs and the towns they reside in, especially in rural areas, maybe the last bastion of fighting gentrification and building sustainable African American communities, it is vitally important for HBCUs, their professors, and students especially continue to be present.

We were able to catch up with Tayla Solomon, a rising junior at Alabama A&M and Urban Planning major with a minor in Political Science,  who was one of the Bulldogs in attendance at the conference and got her to share her thoughts on attending:

What made you decide to major in Urban Planning? I decided to major in urban planning when I visited spring ‘16. My college counselor, Paula Dofat, made it possible for me and another classmate to drive to AAMU from Baltimore. I knew I wanted to major in something that not only caught my attention but would be if a great impact to the world in many ways.

Was this your first time attending the APA conference? Yes, this was my first planning conference. I’m excited to start fundraising for the next one.

Was Alabama A&M University the only HBCU present that you are aware of? If so, do you think it is important for more HBCUs to be present in the organization and conference? If so, why? AAMU was not the only HBCU at the conference. But there are a limited amount of HBCU’s that are accredited in urban planning. HBCU’s make up a small number in most conferences and most do not have the funds to participate.

What was the most important take away for you from this conference? The most important thing I took away from the conference was to network. There are thousands of people who share the same interest in you and they are also willing to help you and work with you. Once you step out of your comfort zone you will become unstoppable in whatever you put your mind to.

Did you have a favorite workshop that you attended and what was it on? I cannot remember my favorite one exactly but it talked about making vacation area sustainable for long term housing.

Lastly, what is your dream pursuit within the field of planning? My dream is to ensure better living conditions in impoverished cities. I hope to get a chance to work in every field of planning, mainly housing, environmental, and transportation.

If you want to donate to Tayla Solomon and the other Urban Planning students to attend more conferences, please contact: Ms. Heidi Weaver, Secretary, Tel: 256-372-5426, heidi.weaver@aamu.edu

2017 National Real Estate Preview: HBCU Alumni Real Estate Agents Look Ahead To The New Year

An HBCU alumna and ally who are now prominent real estate agents sit down and talk with us about what to potentially expect for the year ahead in the real estate market covering coast to coast.

Tiffany Curry (top left) – A Texas Southern University alumna who now works for Berkshire Hathaway Home Services Anderson Properties in Houston, TX.

Kimberly C. Lehman (top right) – An HBCU ally who is married to a Hampton graduate and now owns and runs KC Lehman Realty as a division of John Aaroe Group in Los Angeles, CA.

What do you believe the rate hike in December by the Federal Reserve may do to the coming year of real estate?

TC: I believe the rate spike will motivate buyers that have been on the fence. I think people will fear the rates may continue to rise and that we will see an increase in buyers purchasing homes. Rents are at record highs. It is still less expensive to own vs. lease.

KC: If the interest rates rise in the way we expect, it will impact how much buyers currently in the market can afford. As such, home values should level out, but many buyers will continue to be priced out.

Tell us something that makes you optimistic and pessimistic about the 2017 real estate market?

TC: I’m excited that the 2017 market has already shown positive signs of movement. I currently have clients who are ready to sell and purchase new homes in the first quarter of 2017. I expect my business to double in the 2017 year which is remarkable in the current marketplace. Consumers are seeing value in homeownership and are trading their homes for more space or better locations.

KC:  Optimistic: In Southern California, there is no shortage of buyers, and therefore opportunities for business continues to grow. If values level out, that might balance out the supply and demand which also equals more opportunities for business.

Pessimistic: Uncertainty of our new administration has sellers that ordinarily would sell right now holding tight. Also current home values will cause some buyers who are unwilling to compromise on property location and/or condition to drop out of the game.

Where do you see the most opportunity for real estate investors in your market for 2017?

TC:  In Houston, we have a diverse and growing economy. I see development as an excellent place for investors. Land purchases should be key for investors as the Houston population will nearly double by 2040. Land will become scarce and is a great opportunity for someone that can buy and hold.

KC: Southeast Los Angeles if they are smart. They missed the boat on Inglewood.

Companies like Redfin, Zillow, and others are disrupting the traditional real estate market. How are you seeing their presence influence the real estate market?

TC: Houston is a rare marketplace where we have our own local consumer public facing website, har.com. HAR.com is the only site in the US where Zillow, Realtor.com and others do not hold prominent market share. This has enabled brokers and agents in the market to maintain their presence without the need for an outside third party. Redfin however has come into the marketplace as they offer a discount service. Consumers who want to save on commissions are using their services however it is in line with the traditional discount brokerages that would have attracted this type of consumer. Although they are capturing consumers they still are a very small impact in our local market as most consumers still want the guidance and expertise of a REALTOR that has time to handle their needs rather than one that is focused on transactions.

KC: Buyers and sellers are relying on these sites to educate them about the real estate process and home values. As it relates to the latter, none of these sites are truly accurate. Redfin in particular has gotten their own market share of listings and buyers through their site and their agents are in direct competition with those of us at traditional brokerages. They aren’t always knowledgeable of the areas they are tied to via the site. I’ve heard horror stories!

On the upside, Zillow reviews are liquid gold to agents in the field.

Since reaching its all-time high of 49.1 percent in 2004, African American homeownership has now fallen to an all-time low of 41.1 percent as of third quarter 2016, an almost 20 percent decline. What do you believe can be done in the foreseeable future to reengage the African American consumer?

TC: I believe the African American consumer must be reeducated on the value of homeownership. Homeownership for most Americans is their primary source of wealth and assets. I believe our communities, churches and social groups must put more emphasis on the value of owning the land beneath your feet. As one of the largest groups in consumer spending we must do a better job of prioritizing what we spend our monies on. Material items that depreciate are not the key to wealth. Laying the foundation to a solid financial future for our children and their children’s children are what we must focus on. Building and maintaining our communities by owning what is in them is key.

KC: African Americans need to pool resources in order to compete with the current buyers in the market. Often, our community looks to FHA, NACA, CALHFA and other government programs to help us – but unless we are shopping in low income areas, we can’t compete with the cash offers elsewhere. If we work together and create real estate investment groups we can began to establish potential generational wealth for our heirs.

Thank you for participating ladies and we look forward to your 2018 forecast! To reach these agents please click their names to be directed to their websites.

Tiffany Curry – Houston, TX

KC Lehman  – Los Angeles, CA

 

Buy Mediterranean Before Boardwalk: Real Estate Investment Lessons From Monopoly

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.

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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.

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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.

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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.

 

America’s Farms: African American Women Principal Operators Increase, But Not Enough

By William A. Foster, IV

Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field. – President Dwight D. Eisenhower.

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Typically, I abhor the term people of color, women of color, men of color, and well you get the idea. It lumps a bunch of different groups – and more importantly their interest – into this false sense of PoC (us) versus the evil Europeans (them). Diaspora groups of all ancestry have vied for resources against each other for thousands of years. People of color have waged wars against each other well before Europeans ascended to the top of the power pile over the past thousand or so years. However, in this case there actually is a stark trend developing between women of color and women of European descent and it is going to impact America’s food plates in livings rooms and restaurants across the country and around the world. 

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Men lie, women lie, and sometimes numbers can be misleading. A look at the state of women principal operators from 2007 to 2012 in the latest USDA Agricultural Census would suggest that their is an crisis in farming among women. In 2007, there were 306 209 women principal operators, but as of 2012 there was a reported 288 264 or a drop of almost 6 percent. However, this is where the numbers are a bit misleading. African, Asian, Latina, and Native American women all saw increases in their women principal operators of 4.5 percent, 32.8 percent, 19.4 percent, and 13 percent, respectively. European American women principal operators saw a drop of 7 percent and despite the drop in their ranks they still constitute 93 percent of all women principal operators. In other words, women of color just do not constitute a large enough of the farming population to move the needle – yet. In a generation however, their importance to the health of the communities they represent could have echoing effects on economic and political power going forward.

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In an article from the LSU Agriculture Center they reported, “There are 239 counties in the U.S. where at least a quarter of the population receives food stamps. In over 750 counties, SNAP is helping to feed one-third of African Americans.” Just for clarity there are 3 141 counties in the United States according to the United States Geological Survey. Part of the problem is that still in our community it remains difficult to access quality food at an affordable price. This is especially important given our lack of institutional wealth (see decline in African American land ownership) has resulted in our tendency towards unhealthy foods and being able to predominantly afford sugar and salt laden products that fill us, but damages our quality of health or health capital in the long-term. Quality of life naturally impacts an ability to earn a living and for how long, being engaged in civic discourse, and be an active primer in the social molding of family and community.  The CDC reports that almost 15 percent of African Americans are in poor health. Even more disturbing is the African American obesity rate, which for African American men over 20 is 37.9 percent and for African American women over 20 is an astounding 57.6 percent. Lastly, hypertension among African American men over 20 is at 40 percent and women over 20 is at almost 50 percent just to further drive the health point home. Given the importance of African American women to the economics of African American households (African America is the only group where the women outnumber the men in employment) their long-term health both in relation to their ability to work and birth healthy children is paramount to the community. There is also the anthropological assumption that since women have long been the leadership of nutrition in all households that they have a significant psychological vested interest in improving the quality of food to their families if given the means to do so. Having more African American women engaged in the production of the food at the beginning could lead to a significant change in the eating habits of the entire community at the end of the value chain.

The question then is how can we build upon numbers for African American women farmers and understanding its importance to the African American family and community. As it is, if current trends hold, Asian American women will outnumber African American women as principal operators within ten years. The answer could lay in a private-pubic approach between 1890 HBCUs and existing African American owned agricultural businesses. Each 1890 HBCU, the 20 HBCU schools excluding West Virginia State University because of demographics, through the Association of Public Land-Grant Universities could add to its list of initiatives a means of engaging young girls about the agricultural and farming process. Private HBCU owned companies that are involved in farming like Chestnut Hollow Farms, LLC run by Norfolk State University alum Harold Blackwell would add the private component with 1890 HBCUs to especially target girls and introduce them to help them understand the business side of farming.

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Health is wealth, but unfortunately our health is not in our own hands and especially not in the hands of our nurturers beyond the preparation of it at the end of the value chain. Sometimes it is intangibles or the qualitative factors that can not be measured (peppered with quantitative data) that can be the key to changing our behavior from the farm to the plate where African American women innately are filled with data from generations of their mothers and grandmothers stories. It is true, there is nothing quite like a woman’s touch and that may be the very thing that brings African American owned farm back to prominence.