Category Archives: Real Estate

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

Posted on May 14, 2017 by | Leave a comment

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

 

Leave a comment

Posted in Real Estate

Tagged , , , , , ,

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

Screen Shot 2015-01-27 at 8.03.56 PM

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.

Leave a comment

Posted in Real Estate

Tagged , , ,

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

Posted on December 9, 2014 by | 1 comment

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.

woman-farm

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. 

african-american-woman-farming-everett

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.

470_2495710

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.

index

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.

1 Comment

Posted in Real Estate

Tagged , , ,

42 Million African Americans Own Only 0.33 Percent Of America’s Lands

Posted on October 15, 2013 by | 1 comment

By William A. Foster, IV

A nation may be said to consist of its territory, its people and its laws. The territory is the only part which is of certain durability. Laws change, people die, the land remains. — Abraham Lincoln

ronnie-armstrong-black-farmer-indiana-070701jpg-e632bb337a6a37a1_large-1

The Land Report recently released its annual 100 largest landowners in America. To no one’s surprise there was not one African American individual or family present on the list.  The apex of African American land ownership was over 100 years ago in 1910 when African America owned almost 20 million acres. A far cry from the 160 million acres that should have been owned had Special Order 15 been honored by the U.S. government which is also known as “40 acres and a mule” to most African Americans. By the numbers we have lost over 50 percent of our land ownership the past 100 years and the number continues to drop at an alarming rate for a myriad of reasons. Given that land is the foundation for all social, economic, and political development it could be argued that you can measure a group’s power based on their land ownership. This has been true no matter the economic system in place throughout history. If this is the case then African America is seeing itself getting weaker and weaker generation after generation.

The largest landowner in the country is John Malone, owner of Liberty Media and something few know is he was the second largest shareholder in Black Entertainment Television behind the founders Bob and Sheila Johnson. His initial investment in the company was $180 000 in equity and a $320 000 loan. Eventually, the loan would be paid back but he retained his equity stake, which by the time of the company’s sale would see him receive a return of $700 million. Yes, the man made $700 million on a $180 000 investment. Needless to say, that can buy you a lot of land. In 2010, it allowed him to purchase the Bell Ranch, 290 000 acres of land in New Mexico, and as a result jumping Ted Turner as America’s largest landowner. Just between John Malone and Ted Turner they own over 50 percent of the amount of land that African America owns as a whole.

HBCU business schools have a unique opportunity to change the paradigm of African American land ownership for future generations. This is even more so true at HBCU 1890 schools where agriculture still comprises a major component within the institutions. A class designed around African American land ownership would go a long way to educating graduates, who will typically be in a much better financial position to accumulate land than those with less education. The classes themselves could teach among others things but not limited to; how to implement “poison pills” into their community to prevent gentrification, how to finance land, history of land ownership, timberland investments, and a myriad of other land-related subjects.

Gentrification alone is a problem plaguing a number of African American communities across the nation. This has been especially true for African American neighborhoods located near city centers as many in the suburbs are starting to move back inward. There is also the issue facing African American farmers in this country. Healthy Solutions reports that less than 2 percent of farms today are operated by African Americans in comparison to 14 percent in 1920. There is no doubt that if one examines African America as a nation that its food security and food dependence would have alarm bells ringing for decades now as this situation grows more dire. The USDA in 2010 settled an almost $1.3 billion discrimination lawsuit with 70 000 African American farmers. However, land ownership and African American farms continue to decline further compounding African America capability to have access to quality food options and increasing long-term health issues. I could go into how land ownership influences rezoning of political lines but then I might need to turn this into a book.

Unfortunately, it begs the question as many HBCUs move to a focus on “diversity” whether or not African American economic issues are even on the minds of many HBCU business school leadership. Our situation can not be handled as a “minority” situation. It requires a more targeted strategy to our social, economic, and political state. We can not continue to be the group who has the least but shares the most unless we are content with perpetually being in last and institutionally dependent on others. Land, it remains kind of a big deal.

1 Comment

Posted in Real Estate

Tagged , ,