black people and money

Is Now The Time To Buy Real Estate To Create True Wealth?

Is Now The Time To Buy Real Estate To Create True Wealth?

By Ryan Velez

The Trump Administration has led both to anger and concern from many groups, including the Black community. However, with all the negativity going on, some also see the potential for opportunity. Shawn Baldwin, chairman of the AIA Group, previously wrote for Black Enterprise explaining four ways that Black people could potentially thrive under Trump’s presidency. Baldwin is not done sharing his perspective yet, though, as, in a follow-up interview with the publication, he explained how African-Americans should purchase property during this time with the aim to generate wealth.

“For most people, the acquisition of real estate is one of the best ways for them to become wealthier,” he told Black Enterprise. “For the average person, their wealth is concentrated in their home and non-depreciating assets,—unlike a car or ‘retail jewelry,’ which is purchased at a markup and not worth as much as fine jewelry.” However, Baldwin suggests that because of Trump’s purported interest in urban development, those who buy real estate can both increase their own profits, as well as play a role in the creation of places where people of color would like to live.

Part of the reason that this may be so appealing to Black people is due to the struggles many get in finding small business loans, making real estate a potential alternative gateway to wealth. “They’re not going to give us money that they deem is risky. [Banks] are going to want to give a loan that is based on collateral,” explained Baldwin. He also pointed out that 25 percent of all bank activities are commercial real estate based. “Most of the time, the loans that most people of color can get is a home or real estate loan.”

As a result, to fund ideas and endeavors, he suggests what he calls the “backdoor method.” This means accumulating real estate, then mortgaging it and using the money as you deem fit. Cheap real estate that you then lease out will serve as a great addition to your overall cash flow. One area to focus on is “where there have been significant mortgage defaults because the banks will have pressure to lend in those areas. They don’t have pressure to lend in development because it is incredibly risky.” While these prices may never reach what they were before the housing crash, they are going to climb, and if you buy cheap now, the results may be significant wealth.

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