Moneywise with Kelvin Boston | The Homeownership Legacy

"Moneywise with Kelvin Boston" is the nation's premiere multi-cultural financial affairs program.

>> About the Series
>> About the Host
>> About the Team

The Homeownership Legacy

By Kelvin Boston
Boston Media, Inc.

For half of black homeowners, home equity represents 57 percent of their net wealth, compared to white homeowners.There is an interesting story about two men who went out in search of their fortunes. One man searched the world but ended up broke and disillusioned. He returned home and found his friend who had never left the old neighborhood had become a successful businessman. The world traveler asked his friend how he became so wealthy. The friend told him, “One day I started digging in my back yard and I struck oil.”

With behemoth companies we thought would be around forever trading on the stock market for pennies or not at all, right about now may be a good time to head home where the solid investment of real estate waits to be unearthed.

For most families, particularly low-income and minority households, owning a home remains the key to building wealth. Even among those homeowners with stock, 59 percent still have more equity in their homes than stocks. For half of black homeowners, home equity represents 57 percent of their net wealth, compared to white homeowners.

Today, real estate remains the most concrete of investments over the long term, particularly for African Americans who tend to be more conservative as investors.

From the little city rambler to the dusty shack on acres of former sharecropper farmland, there may be a wellspring of black gold that goes untapped. Professional real estate developers see this and African Americans investors need to get back into the neighborhood and mine the investment potential.

Recent studies show that in the last two years, while the stock market was evaporating the average price of a single family home was rising 35- 40%. In or near the inner city, prices in many of our old neighborhoods have sky rocketed. And in most instances these neighborhoods are being bought up one home at a time by savvy developers, investors and first time home buyers with big ideas.

Where do you begin? With the family estate your approach is important. You may need to call a family meeting of immediate relatives. You don’t want to frighten anyone into thinking you’re trying to take something away from them particularly if there is family living on the property mortgage free. Be prepared to offer a fair market value and buy the property. Allow them to stay on rent free. The cash helps them, the property stays in the family and you’ve bought time to work out a development plan with other family members that could take a few years to execute. Always remember to treat this action like a business. So hire a lawyer to draw up your agreements. You may also need to incorporate and most definitely prepare a real estate development business plan.

Meanwhile, whether it is the family home or you are just prospecting the old neighborhood for real estate investment opportunities begin the process with a study period. Visit the public records of your local government’s planning department or community development agency. Hints of the housing trends and needs can be found in records filed there. Get a copy of the municipal master plan. Chat up elected officials about community wish lists. It won’t make sense to plan, for example, a development of upscale condos for singles in a neighborhood overrun with school aged children and young families.

See if the neighborhood is designated for Urban Renewal or an historical area. Get a map of the area and study housing patterns. Look at all of the neighborhoods surrounding the business district and see which are in easy commute of downtown.

Neighborhoods situated near water or easy access to downtown by public transportation development are a good bet. Old neighborhoods within walking distance of big employers also are good prospects. City locations with abandoned industrial buildings that feature ornate architectural detail also are desirable for new residential use.

Of course, of all the tools applied in this course of study, patience is a key ingredient. Investment maturity takes time and real estate continues to be the shelter of choice. Start digging in your own back yard. Who knows what fortunes lay buried there.

© Copyright 1997-2005 Boston Media, Inc. and New River Media, Inc. All rights reserved.

For half of black homeowners, home equity represents 57 percent of their net wealth, compared to white homeowners.There is an interesting story about two men who went out in search of their fortunes. One man searched the world but ended up broke and disillusioned. He returned home and found his friend who had never left the old neighborhood had become a successful businessman. The world traveler asked his friend how he became so wealthy. The friend told him, “One day I started digging in my back yard and I struck oil.”

With behemoth companies we thought would be around forever trading on the stock market for pennies or not at all, right about now may be a good time to head home where the solid investment of real estate waits to be unearthed.

For most families, particularly low-income and minority households, owning a home remains the key to building wealth. Even among those homeowners with stock, 59 percent still have more equity in their homes than stocks. For half of black homeowners, home equity represents 57 percent of their net wealth, compared to white homeowners.

Today, real estate remains the most concrete of investments over the long term, particularly for African Americans who tend to be more conservative as investors.

From the little city rambler to the dusty shack on acres of former sharecropper farmland, there may be a wellspring of black gold that goes untapped. Professional real estate developers see this and African Americans investors need to get back into the neighborhood and mine the investment potential.

Recent studies show that in the last two years, while the stock market was evaporating the average price of a single family home was rising 35- 40%. In or near the inner city, prices in many of our old neighborhoods have sky rocketed. And in most instances these neighborhoods are being bought up one home at a time by savvy developers, investors and first time home buyers with big ideas.

Where do you begin? With the family estate your approach is important. You may need to call a family meeting of immediate relatives. You don’t want to frighten anyone into thinking you’re trying to take something away from them particularly if there is family living on the property mortgage free. Be prepared to offer a fair market value and buy the property. Allow them to stay on rent free. The cash helps them, the property stays in the family and you’ve bought time to work out a development plan with other family members that could take a few years to execute. Always remember to treat this action like a business. So hire a lawyer to draw up your agreements. You may also need to incorporate and most definitely prepare a real estate development business plan.

Meanwhile, whether it is the family home or you are just prospecting the old neighborhood for real estate investment opportunities begin the process with a study period. Visit the public records of your local government’s planning department or community development agency. Hints of the housing trends and needs can be found in records filed there. Get a copy of the municipal master plan. Chat up elected officials about community wish lists. It won’t make sense to plan, for example, a development of upscale condos for singles in a neighborhood overrun with school aged children and young families.

See if the neighborhood is designated for Urban Renewal or an historical area. Get a map of the area and study housing patterns. Look at all of the neighborhoods surrounding the business district and see which are in easy commute of downtown.

Neighborhoods situated near water or easy access to downtown by public transportation development are a good bet. Old neighborhoods within walking distance of big employers also are good prospects. City locations with abandoned industrial buildings that feature ornate architectural detail also are desirable for new residential use.

Of course, of all the tools applied in this course of study, patience is a key ingredient. Investment maturity takes time and real estate continues to be the shelter of choice. Start digging in your own back yard. Who knows what fortunes lay buried there.