Black Millennials should be looking to buy in whatever area they live in and know best. Why? Because in those areas your local knowledge is an advantage in the marketplace. You are able to locate the areas of appreciation better than an outsider. You are able to know your local elected officials, real estate professionals, and other business owners a lot better than someone that is not local to the area. When you buy locally you have an advantage because you have years of knowledge about trends and changes in neighborhoods.

Where do black buyers fit in in terms of gentrification? Should we be looking at areas that are gentrifying or in ‘the hood?’
Black buyers should be looking to purchase anywhere they can spot value. In the hood or not it doesn’t matter. There is a tenant for every property if it is well maintained. If you can spot value there is a significant opportunity to create wealth. For example, if I can consistently find properties 50% below market value I can create a million dollars of wealth in less than a year. Believe it or not, there are currently many markets where this is possible today. There are lots of areas that are experiencing job growth, population growth and have good school systems. These components provide an opportunity to create serious wealth. As Americans we all want opportunity. We all want our children to have good school systems one of the ways those good school systems are created is by taxing businesses and homeowners. That dynamic is always changing and the change creates an opportunity for those that are prepared and ready to take advantage. The white buyers are ready so should the black buyers.

How do we spot a bargain and how much money do we need to start thinking of buying?
In order to know you have a bargain, you have to know your local market. You can find out what the local market prices are by looking on the MLS- Multiple Listing Service. I would recommend focusing on properties you can purchase at least 20% below market. The price point at which that occurs is vastly different if you are located in New York City vs Euclid, Ohio. Home prices are geographically relative. However, if you are patient there are strategies that allow you to purchase properties for pennies on the dollar. Some of the strategies I have either used or helped others use include purchasing from local governments, tax sales, wholesalers, direct mail campaigns, auctions, probates, and many others. Most people think there is one way to purchase a home and that is by using a realtor. That is a good method sometimes, but it should not be your only method. Realtors are incentivized to sell you a home at the highest price possible. Your mission should be to find a home at the lowest price possible. Both objectives are in contrast.

Is buying a home the same as buying a condo? Is one better?
All of my home buying strategies and advice are based on the perspective of building generation wealth. The mindset of home buying should be asset buying. A condo could be considered an asset but the vast majority of them are not, because they do not cash flow positively or they cash flow at a considerably reduced level. This occurs because the monthly maintenance fee associated with condos is something arbitrary and are cash flow killers. In addition, when the market changes condos are the first to be hit adversely. I do not recommend condos. Condos can be sexy, but show me a person that has purchased a condo as a first purchase and I will show you a person that has lost out on a lot of potential capital gains from the real estate market.

If we have the money, should we be buying a 2nd place an renting it out?
Absolutely, buying a 2nd place should be an opportunity to increase your monthly income. When you get to the 3rd and 4th purchase you should begin to see your rental income match or exceed the active income you work really hard to earn. The point when your passive income exceeds your monthly expenses is the point in which you are effectively retired. At some point, it becomes more than a passive investment it becomes a business and you have to run it like a business by creating systems, hiring property managers, and constantly measuring the success and failures of those systems in place.

Can you offer any other advice or reasons that real estate is still a hot investment?
If your goal is to create generational wealth or retire early or supplement your current income, real estate should be right there with other alternatives like having a side hustle or starting a business. Real estate is the I.D.E.A.L. investment because it provides monthly INCOME. It provides tax benefits and DEDUCTIONS via DEPRECIATION. It allows you to build EQUITY instead of throwing hard earned money away on rent. Real estate APPRECIATES on average 5% a year. And real estate allows you to LEVERAGE such as the FHA program that allows you to purchase an owner-occupied property for as little as 3.5% down payment.

Read Part 1 of this series here. And for more information, visit A. Donahue’s website, www.adonahuebaker.com or follow him on twitter and Instagram.

Did you discover information about home ownership that you didn’t know?

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