The Real Estate Think Tank: Episode 5: Foreclosures and Shorts Sales

 

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The Real Estate Think Tank: Episode 5: Foreclosures and Shorts Sales

How to Navigate Legal Structures in Real Estate

As the real estate market attempts to move past the COVID-19 pandemic and progress toward a “New Normal,” federal moratoriums have become a way of life in real estate. Navigating the legal landscape of a local market has always been part of creating wealth in real estate. Every real estate marketplace is subject to its own local laws, as well as its state law and federal law. At the highest level, real estate investment and development is a game of understanding the rules—the applicable laws, ordinances, building codes, etc., and knowing when you can bend them in your favor through variances, court cases and lobbying. Although much of this may seem a little nefarious, it need not be, as our legal system was designed to establish a certain set of default rules for real estate, with a mechanism to allow for change in the event that either some rules are inapplicable generally or inadequate for a given situation. That stated, below are some ways to capitalize, navigate or at least survive the laws of any real estate market:

1. Choose Your Market Wisely

The most effective way to navigate any real estate investment is by carefully choosing the market in which to invest. Location, location, location once again proves to be a sage cliché. Being aware of legal risks and rewards is just as important to the analysis of any property as its income numbers and  property condition. The location of a property will not only determine the set of laws that an investor must navigate, but it will also determine the prevailing legal sentiment around the property. This sentiment will effect the laws passed in a given market and have a bearing on how local courts will view real estate disputes like waste, nuisance, foreclosures, evictions, etc. Understanding the local view of these issues will allow investors to accurately estimate the legal costs and make an informed investment decision as a result.

2. Know The Laws That Affect The Property

Understanding the applicable laws influencing property can be the difference between a profitable investment and a poor acquisition. Legal frameworks like rent control, affordable housing zoning and industrial tax credits will all effect the viability of an investment. This is especially true with real estate development, as many jurisdictions have detailed, idiosyncratic new development requirements that protect the rights of both the developer and the community. These requirements may affect zoning, construction ordinances, restrictions on selling and transfer of the property and even property taxes. An intimate knowledge of these regulations is essential, even if the purchased property is not newly constructed, as an acquisition that is economic in some jurisdictions can be rendered uneconomic by the prevailing local new development requirements. Please also keep in mind that recently renovated buildings can be considered “newly developed” in some jurisdictions and subject to new development laws.

In addition to new development regulations, investors must be aware of other laws that could affect properties. Building ordinances, for example, affect all properties, not just those that are undergoing construction and renovation. These ordinances are also present at every level of legislation from the federal American Disabilities Act and FHA guidelines all the way down to the village building code. Properties that are not compliant with the requirements of the local building code are subject to fines and violations, both of which eat into investment profits. Much of the same can be said for zoning ordinances. In most jurisdictions, there is a mechanism to apply for a variance or appeal for both zoning laws and the building codes. Variances to zoning are more frequent than building code appeals, as building codes are driven by use and public safety concerns, whereas zoning is primarily driven by municipal planning and use. Understanding local building codes and zoning laws is essential to real estate profitability. To do avoid doing so is to raise the risk of an investment by exposing it to additional risk that can be easily mitigated. Attorneys, expeditors and knowledgeable contractors are effective allies in mitigating this area of legal exposure.

3. Understand The City/Town/Village Plan

Every municipality publishes a plan of development for its area. Much has been stated and written about the importance of the local plan. This document outlines the areas that the local government wishes to develop and the incentives that it will provide to stimulate such development. Often times unviable projects become realities, because they are either moved to or fortuitously located in a development zone. Understanding the presence of incentives is essential to obtaining an accurate estimation of value for a property. The local municipal planning document will assist with such a determination.

4. Hire Great Professionals

This point is mentioned in numerous articles on this blog and above, so it won’t be expanded in much detail here. If legal analysis and/or real estate planning is not a strength, it is important to hire professionals to ensure that the necessary information is readily available.

5. Remember That It’s Not Personal

Laws reflect the dominant ideology of an area. Every area has its own context, demographic and history, which leads to a prevailing sentiment of how real estate should be managed by default. In other words, real estate laws are a collection of the most popular ideas of how real estate should be run in an area. Most people aren’t anti-investment, nor are they against wealth per-se. Most voters, however, will vote to protect their interests and this takes different forms in different locales. In most instances, with notable exceptions, real estate laws are not enacted for personal reasons and, in the absence of extreme lobby power, there isn’t much any one investor can do to change the laws. The most viable course of action for most investors is to be aware of the legal scheme that affects a property, earnestly consider if the local laws work for the investor’s criteria and find viable ways to navigate the relevant laws.

So, this is my take on how to navigate legal structures affecting a property. This a high-level view of this topic. This post definitely could have been substantially longer, but I am happy to discuss your comments below.

The Real Estate Think Tank Podcast: Episode 3: Should I Purchase A House Now?

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The Real Estate Think Tank: Episode 3: Should I Buy A House Now?

The Real Estate Think Tank Podcast: Episode 2: Wholesaling

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The Real Estate Think Tank Podcast: Episode 2: Wholesaling

The Real Estate Think Tank Podcast: Episode 1: Welcome to TRET

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The Real Estate Think Tank Podcast: Episode 1: Welcome to TRET 

Why Most People Don't Get Rich In Real Estate

Initially, I intended this post to be a continuation of my prior post on how to get rich in real estate. I was going to address the barriers to entry that most people confront when attempting to begin a career in real estate and offer some suggestions on how to get around them. I am still going to address some of those barriers, but upon further reflection, I think that there is a common theme amongst most of the reasons why most people do not succeed in real estate when they wish to do so—motivation.

This may seem harsh, but please let me qualify my statement by saying that it is not easy to maintain consistent motivation. Having sufficient motivation to push through real estate losses, market downturns, bankruptcies or even years of unfruitful prospecting takes inner strength. During down times and after particularly difficult lessons in real estate, it can often feel like the experience was a sign to quit or move in a different direction. It takes true motivation, self-confidence and some self-delusion to look at a negative real estate experience, learn from the experience and continue on. This motivation is intrinsic and it only comes from a goal-driven approach to make it in a real estate. Quitting can never be an option. To that end, I want to share the following link to “The Strangest Secret” by Earl Nightingale, in the hopes that it is helpful to someone.

The Strangest Secret: Earl Nightingale

Having addressed the role of motivation, let’s take a look at the primary reasons for not succeeding in real estate and address them:

Not Enough Money, Credit, Funding

The financial barrier to entry into real estate deters most people trying to enter the market. I have written about this many times, but I have no problem reiterating that there are many ways to get started in real estate without using money or credit. I want to be clear, however—real estate investment is not the only way to make money in real estate. I definitely believe it to be the most lasting and transferable way to accumulate real estate wealth, but there are other ways to make money in real estate. Obtaining a real estate license or securing employment in as a real estate professional are both ways to begin a real estate career with little or no financial investment. A career as a loan officer, appraiser, attorney, property manger or any other real estate service professional will not only expose you to real estate markets and provide you with an invaluable real estate education, but can also lead to wealth through hard work. This wealth is bounded by the amount of hours that you can work and is not necessarily transferable, but it is feasible and requires a much smaller financial investment upfront. Moreover, the knowledge and experience gained in a real estate service career can lead to a transition to a more informed investment career.

Focusing on the real estate investment arena, there are a number of ways that you can begin with little or no money upfront. Birddogging and whole selling are both real estate investment methods that can require little to no money down. If your sphere of influence includes people with disposable income, creating a presentation and requesting investments from those that know, also takes a minimal financial investment. It may take an emotional investment to try to make such a presentation, but such experiences are part of growth. You can also save up over time, work on your credit place yourself in a position to invest in the future. Keep in mind the quote by Bill Gates: 

    “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”

No matter what your financial position right now, you can become a viable real estate investor with a down payment through focus and determination. If ten years seems like a long time, plan to do it in five or three. The bottom line, however, is that three, five or ten years will pass even if you don't work to improve your financial situation, it only benefits you to make sure that you do so while this time is passing.

The Market Is Bad

Markets are cyclical and we inevitably find ourselves in a down market at some point. A down market, however, is never an excuse not to start your real estate career. Although down markets may affect real estate hiring and the availability of funding, there are opportunities to invest and enter the real estate service market during any market. A down market merely signals a shift in strategy. I have written previous posts about how to navigate a real estate downturn. Please feel free to scroll through this blog and read them. As reminder, however, the lack of funding that usually takes place during a down real estate market necessitates creative financing like seller financing, buy-leasebacks (commercial real estate only), private lenders and syndications. Landlords can avoid pitfalls during these downturns by keeping reserves during times and prosperity, being very meticulous at all times with vetting tenants and by searching for ways to improve expenses and management during the lean times.

I Don’t Have the Time

This reason is a very popular one. Many people feel that they have the desire to succeed in real estate, but lack the time. For this reason, I have one question:

What occupies your time?

We certainly make time for the things that we deem essential. Many times, however, the non-essential items can inadvertently sap our time and energy. To that end, its important to be acutely aware of things that slowly leech away your time like TV, Netflix, and mobile games. It is also very important to take the time to truly self assess and make sure that you are not prioritizing items falsely labeled as essential. Committing to success in real estate will require a serious level of candor during this time of reevaluation. 

Becoming successful in real estate also will require a change in lifestyle. It is also necessary to look at which time commitments you hold perpetuate your current situation. Every lifestyle consists of habits that perpetuate it. Keep in mind that changing some of these habits may even prove to be uncomfortable, as there is a certain level of comfort in predictability. Perpetuating success in real estate will require habits that create success. The habits may seem different, strange or even uncomfortable at first, but they will become second nature over time and will bring you toward your intended goal

I Can’t Find Deals

Finding investment opportunities is certainly a large concern for new investors. It can take some time to find the first set of deals, but consistency definitely yields results. In my experience, very soon after the first few deals come in, continued consistency leads you to a point where it feels like the floodgates have opened and soon the issue becomes that there are too many deals to be serviced. That said, below are a few ways that you can find your initial deals. This is by no means an exhaustive list:

• Check the local MLS;
• Post “We Buy Houses” signs (where permitted);
• Check/mail to the filings of lis pendens for foreclosures;
• Check/mail to divorce and probate filings;
• Attend garage sales;
• Contact for sale buy owner properties;
• Market to owners of vacant or high-grass properties;
• Check the listings for foreclosure sales;
• Sign-up for/attend tax lien sales;
• Call/contact owners advertising for tenants;
• Attend/join local real estate investment associations;
• Advertise online.

I am happy to explain these strategies in more detail in the comments, if you have any questions. I also want to mention that realtors and attorneys are restricted from undertaking some of the strategies.

Real Estate Is Not For Me

Now, this is the reason that I respect the most and my answer is very simple—“Don’t waste your time with real estate.” There are many ways to build wealth and real estate investment requires a certain level of passion and motivation, as described above. Real estate should be a path to and not a distraction from wealth generation. Realizing that real estate isn’t your arena is important step to finding your true area of interest. I encourage you to seek that arena and pursuit with your whole heart. 

In the words of Kevin Garnett, “Anything is possible!” Motivation is key. The best thing that a new or seasoned real estate investor can do is to find ways to kindle and feed that spark. Regularly revisit your "Why" and remind yourself of why you are seeking to succeed in real estate. Join a group of like-minded individuals and to continue to motivate one another. Read, attend classes, continue to learn and continue to improve.

Well, that is my take on the impediments to success in real estate. Please feel free to comment below.

How To Get Rich In Real Estate: The Proven Method

Welcome the first post of the New Year! A number of years ago I wanted to start a business purchasing residential mortgages in the secondary market. This was a significant time after the Great Recession of 2009 and although the smoked had cleared from that downturn, enthusiasm in the mortgage secondary market had not yet fully recovered. I knew that if I were to market my business idea, which I was positive was sound, I would have to not only formally document it in a presentation and a business plan, but would also have to show actual positive implementation results. I realized that I would have to raise a small amount of capital to implement this strategy on a small scale, so that I could present it to larger investors upon its successful completion.

In service to this idea, I spent a few weeks attending business classes and drafting a business plan in order to present the idea to potential investors. Once the business plan was complete, I brought it to the Small Business Administration to have another set of eyes on it. The plan was essentially complete and required some quick format changes to meet the SBA’s format. The changes were made quickly and the submission process was promptly completed. A few days later, the SBA gave me a final opinion on the business plan. The review wasn’t groundbreaking—it merely confirmed that the plan was complete, but the necessary next steps were Earth-shattering in their simplicity.

The SBA suggested that I seek out angel investors and pitch my idea to my sphere of influence, however, it also offered an alternative:

•    Save up enough money to put 10% - 20% down on a house in a local    market;
•    Purchase an undervalued or affordable property;
•    Prepare the property for rental;
•   Find tenants to rent the property;
•   Use the rent to pay the mortgage and build up equity;
•   Refinance or sell the property at the first available opportunity, using   the cash to fund your next venture.

It really is that simple…at least in theory. Believe or not, it is also very possible for most. This strategy is an expanded version of the popular BRRRR-Buy, Repair, Rent, Refinance, Repeat, strategy that is frequently discussed on the Internet and in real estate investor circles around the country. I didn’t receive it from a local investor or from a get-rich-quick website or even from a seasoned member of the real estate community trying to market a coaching program, however, but instead from the federal government. There can be no greater confirmation of the reliability of this strategy.

There it is. I’m definitely not the first to reveal this to the world and I won’t be the last, but let’s explore each step of the process more in depth:

Save Enough Money

The cost of entry is and lack of credit are the most popularly used reasons cited for not investing in real estate. According to the NAR, the National Association of Realtors, the median home price in the United States is $310,880. Admittedly, saving $63,000 can be outside of the means of most, but there are many local markets which have properties for sale for less than $200,000.  If saving $20,000 to $40,000 seems to be an untenable amount, the average cost of a new car in November of 2020 was $39,259, according to Kelley Blue Book. Assuming a poor/fair credit, causing a higher interest rate of 6%, a new car financed at 100% for the typical 5 year term, would cost $682 a month. A used car costing $20,000 with the same interest rate and no down payment would cost $387 a month. If those payments sound to high, a $17,000 car under the same circumstances would cost $329 a month. Due to the interest built into those monthly payments those hypothetical cars would be purchased at a near 16% mark-up. Interestingly, placing $333.34 a month in a savings account with 0% interest would allow a person to save over $20,000 in 5 years. If five years seems like a long time to save, please keep in mind that five years will pass whether or not you save at all. Furthermore, most people have bills that they have paid consistently for more than five years for services, cars, cell phones, etc. If necessary, a down payment can simply be thought of as another bill—your Independence bill. There are certainly quicker ways to amass a down payment—credit, borrowing from friends and family, birddogging, whole-selling, but one things is clear, the barrier to entry is not an impossible hurdle.

Purchase An Undervalued/Affordable Property

This is probably the second easiest step of this the method. I don’t want to be misleading, it certainly takes a great deal of effort to locate a property that works best for your personal situation, but this is the step during which the most support is usually offered. Finding a real estate agent with whom you can work is essential to this process. Although it is both possible and likely that the property that is chosen for investment is not found through an agent, the access to market information that  good agent has, as well as the benefit of their transaction experience can be invaluable. That said, it is important to look for a property that is at least in your price range and at best is undervalued. It is also essential to stick with an area of familiarity, if you have any. If you are a businessperson or are familiar with a certain type of industry, then commercial real estate may be your forte. In most instances, however, residential rental real estate is the easiest way to enter into the market as most people are familiar with either living as a tenant or living in residential real estate.

Although I highly recommend using a real estate agent, it is important to seek off-market properties sales, as well. Estate sales, for-sale-by-owner, speaking with local investors, tax lien sales and even memberships to local real estate investment clubs are all viable ways to find deals. REO sales are also a great way to find value, but those sales are very much on market and are always listed with an REO broker. I generally recommend not approaching a large REO broker directly as a new investor, as they typically have a long list of investors with whom they already deal and usually to whom they steer business. Anything that a new investor receives from such a broker has usually been passed by numerous times by other investors and for good reason. Establishing a relationship with small or “up-and-coming” REO broker, however, could prove to be very valuable, provided that their REO vendors are truly servicing that agent and not merely using him or her to test the market for their properties. Tax liens are also a great opportunity for investment, so long as you have time to investigate the property and a good title company and a good ESA company to ensure that there are no serious restrictions or environmental issues with the property.

• In your search, please make sure to avoid properties with the following issues:
• Located in an area that is unfavorable to rentals;
• Cannot be rented;
• Cannot be easily financed;
• Has really high taxes;
• Has serious repair issues;
• Has title issues;
• Has environmental issue. 

A good lawyer, mortgage professional and home inspector will ensure that you avoid any and all of those pitfalls. If you don’t know where to find reputable real estate professionals, an experienced realtor or real estate investor can provide you with contacts to professionals willing to assist you. Above all, it is important to maintain a balance of not rushing into a purchase, while not indefinitely sitting on the fence and never closing a deal. Although the old real estate adage—“The money is made on the buy,” is true, it is very important not to develop analysis paralysis.

Prepare The Property For Rental

Although I do not want to gloss over this step, as is it is a key step to this process, to ensure that this post doesn’t turn into a book, I will keep it short. Careful purchasing will ensure that the necessary repairs are not substantial. In order to ensure that you can handle minimal repairs, it is advisable to save an additional $5,000 to $10,000 for repairs. If this additional amount to save seems to be prohibitive, then please reduce the intended purchase price by $5,000 to $10,000.

Further, a reputable contractor is key to this step, however, there is no substitute for attentiveness. An owner’s presence during this phase of investment is key, both to show engagement and also because this is an important time for an early investor to learn more about the process of rehabilitating property.

Find Tenants To Rent The Property

If money is made on the buy, then finding tenants is where the money is secured. Tenants can be found through effective advertising and real estate agents. It may take some time to find the strategy that works best for you and the property’s market, but it is possible to create a pipeline of tenants for your rental or future rentals. It is also equally as important to vet your tenants to increase the likelihood that they will pay on time. Credit and reference checks are important to this process. You can either learn to how to perform these checks, which are not difficult to learn, or hire a vendor to do so. There are a few tricks of the trade, like never calling the current landlord of a potential tenant, as they are never honest about a bad tenant, but this can all be learned with time and research

Use The Rent To Pay The Mortgage And Build Up Equity

The beauty of owning a cash-flowing asset is that it pays for itself. Even if you were to break even with the rent after the mortgage payments is factored in, equity would still accumulate. In some instances, it may even be worth taking a loss merely to build equity, because appreciation works in tandem with equity accumulation. I would be very careful, however, not to take losses on a property in a depreciating market. That said, if you have acquired and rented correctly, this step is very passive.

Refinance Or Sell The Property At The First Available Opportunity

This is the payout. Just like the purchase, this is also a step where you will find a great deal of support. Every real estate professional loves working for a motivated seller and profit will be your motivation. Although any number of things can happen to delay a sale and marketing times may be longer than expected, depending on the market conditions, the finish line is in sight at this point. It is important to remember that all pricing should be well-informed and aggressive, if possible. It is always greater to take a hit of a few thousand on the asking or purchase price than bare the risk and cost of additional carrying charges, especially when a deal is imminent. Flexibility and creativity in closing terms and financing may also be helpful in avoiding unnecessary standoffs and allow both parties to walk away feeling like their needs were met through the transaction.

If the opportunity presents itself sooner, it might even be best to skip steps 4 and 5 and merely flip the property. That decision is entirely up to you. The most important part is that profits gained are used wisely and hopefully to buy more real estate.

Well, that’s my take on how to get rich in real estate. As I said earlier, the concept is simple, but the execution takes effort. Feel free to leave your comments below and please stay tuned for my next article—“Why Most People Don’t Get Rich In Real Estate."

The End of 2020: Now What?

2020 has been a life-changing year for everyone, literally everyone. From the global pandemic, to the fluctuating economy, not to mention the seismic shift in the perception of "going to work," it is safe to say that the world is different place than it was 12 months ago. Now what?

Every year Bloomberg Business Week puts out its "Bloomberg 50"--a list of 50 individuals that have made their mark during the prior year. Although this year's list contains a number of impressive men and women who were able to quickly mobilize and make moving, positive contributions during this tumultuous year, it is notable that not one member of this list was mentioned for contributions to the real estate market. In fact, there are many executives on the list that are touted for reducing the size and/or the footprint of their companies, which in many instances includes real estate divestment. Furthermore, Blackrock, a private equity that is well know for its real estate investments, has made the list, not for real estate, but for its renegotiation of national debts in South America.

The lack of presence of real estate in this list is yet another illustration of what was obvious to all real estate professionals--2020 was not the year of the major real estate transaction. As people hunkered down during to quarantine, the economy fluctuated and work-from-home became the norm, the real estate market dramatically changed. Mortgage delinquencies rose, office spaces became more available, the cost of materials trended upward and permits for new projects trended downward. Migrations from urban areas also took place en masse in March and April as those with the means and desire to seek less crowded surroundings during the spread of the pandemic did so. Although the amount and duration of this recent migration may be disputed, the effects of this exodus have noticeably shifted the dynamic in many local real estate markets, for better or for worse.

As asked earlier, "Now what?" Anyone that has paid even a little bit of attention to this blog over the years knows that I do not "do" doom and gloom. There is always opportunity in change and if there is one thing that 2020 has done well, it is that it has exposed a number of opportunities. From the rise of Special Purpose Acquisition Companies to the consideration of rezoning in urban areas, opportunities to add value, create wealth and thrive in the real estate market are going to present themselves throughout 2021. Rather than make a brief list of some of these opportunities in this post, I will attempt to explore them more in depth in posts throughout the upcoming year. 

Instead of looking back on notable movements in the real estate market during an unprecedented time, I have decided to look forward to the apparent opportunities of the upcoming year. So, please join me as The Real Estate Think Tank.com celebrates its 10th year in existence in 2021. It has been a wild ride thus far, let's conquer next year together. 

See you in 2021.

Let’s Not Forget the Expenses

When either forecasting, underwriting or simply checking the figures on a deal, it is important to account for expenses. The mere mention of the word expenses immediately brings certain images to the mind of most real estate professionals, such as taxes, labor and materials. Proper accounting for such expenses, however, can make or break a financial model and skew underwriting assumptions. That said, it is important to employ the following practices to ensure that your expense estimates are accurate and reflective of the market.

Watch the Market

The market always is always newsworthy, but for real estate professionals certain metrics will indicate expense tendencies. One such metric or indicator is Housing Starts. Housing Starts are an indicator that closely predicts the residential real estate market. It tracks the number of construction projects that have started construction after filing for a building permit. This data is tracked by the Census bureau, which conducts random surveys of building permit filers. Other such indicators are the prices of timber, copper, steel and raw materials. Movement in the Futures for these materials is even more indicative of how the market believes these materials will fare, as these are the prices that people are willing to pay in order to make sure that they are not hurt by pricing changes.

Speak with Professionals

No one is more up to date on the trends of expense pricing than the very people whose livelihoods depend on them. Below is a short list of some real estate professionals that could be helpful:

Accountants: These number crunchers are great general resources for expense pricing, as they are usually deal with many different types of business and are privy to the costs amounts of many different markets. 

Contractors: Few professionals are as heavily affected by material and labor prices as contractors. As such, they are usually keenly aware of pricing trends. 

Local Governmental Employees: Assessors and other county, state and local staff are usually awesome resources for filing and governmental fees. They are also usually aware of any upcoming changes in these fees. 

Local Vendors/Suppliers: No one knows prices and pricing trends like the professionals selling materials.

Remain Flexible

Flexibility is crucial to proper prediction. Whenever forecasting or modeling, it is important to build in fluctuations into your expense assumptions. I typically account for an ambitious 5% year over year increase, with the understanding that if prices increase by a lesser amount or drop, my projected performance will only improve. Once notified of a significant change in a particular expense, it is important to update your models or calculations accordingly to ensure accuracy.

Accounting for expenses is an ongoing process that takes attention to detail. Accurate expense assumptions, however, can make or break your deal, so the effort is well worth it. That is my take on expense accounting. Please leave your thoughts below. 

Social Justice Real Estate

I try my best on this blog to focus on the issues effecting the real estate market and offer a perspective uninfluenced by political factors. To the extent that social factors effect the real estate market, I am happy to address them, but I work diligently to ensure that this blog does not serve the dual purpose of promoting any particular political ideology. With that said, we are all contextual creatures and I, as an African-American male, cannot ignore the current outcry regarding police brutality against my fellow brothers and sisters.

Although the issue of police brutality against black and brown people is nothing new, it is refreshing to see all of the momentum that we are generating toward a solution. I am prayerful and hopeful that the demonstrations being made, the dialogues taking place and the changes that have begun are indicative of a new direction that our country is taking, toward working on resolving the clearly apparent and lingering racial biases found in our country. Police brutality is certainly an important issue that must be resolved, but is a symptom of an American history of racially stratified policies, both formal and informal, that have lasted for centuries and preserve advantages for those not of color. Given that the “complexity” of race relations in our country has developed over centuries, it is reasonable to expect that the solution to this issue, will not be a quick fix, but it absolutely necessary that every American commit to working toward a resolution of this issues. Until we heal our racial wound and deal with our checkered past, we cannot truly move forward as a nation.

What does this have to do with real estate?

Well, I’m glad that you asked that question. Real estate, in fact, has frequent been used to either preserve a status quo or to begin drastic change. From the mortgage redlining of the 50’s, 60’s and 70’s to racially restrictive land covenants, to blockbusting, to redistricting, to urban planning, to affordable housing programs, it is abundantly clear, real estate can influence the path of a society. The issues of the oft mentioned “inner city” are the result of urban planning, which has used zoning laws, covenants, variance hearings and other land use methods to ensure that some areas thrive and others flounder. These planning decisions had lasting effects, as communities were shaped by these decision, many of which have lasted for generations. 

Few issues are more political than land use and few are more hotly contested. Proposed major changes in zoning draw large numbers of reactions on both sides. Elections are won and lost over the location of new developments or the violation of the ubiquitous NIMBY. In fact, in most cities, big and small, there is no group more powerful and wealthy than the real estate lobby, which works to ensure that either status quo is maintained or that their notification of any changes is advanced as possible.

So if real estate can garner so much focus and convey so much influence, then the importance of acquiring as much of it as possible is clear. As Master P recently said, you have own blocks to create influence. In actuality, few things speak louder than the concerns of a collective of the largest landowners. If you are skeptical, look at how many of the largest campaign contributors of most local, mayoral and gubernatorial elections are directly tied to the real estate market. Also look at the amount of tax benefits, such as PILOTs and tax credits are given to large developers or businesses that intend to open headquarters in an area. Governments have in some instances taken land from smaller private landowners through eminent domain to ensure that such developments or headquaters are able to be built.

When it comes to real estate not much has changed from the days of feudalism—land equals influence, so if people of color want to be heard in a lasting way and establish generational change, one way to do so is to own land and/or to influence land policy. Real estate has always been a powerful tool for social change. If we do not mobilize and acquire, then we will continue to be at the mercy of the planning decisions of a group that does not share our interest. Diversity has many benefits, but it is important that we do everything that we can to secure our seat at the table, so our inclusion is a necessity and not a mere act of benevolence. 

Well that’s my take on social justice real estate. I’d love to hear your thoughts. Please comment below.

Back in the Saddle Again

Hello Readers/Subscribers of the Real Estate Think Tank,

I once read that it's not how many times that you fall off the horse, but how many times you get back on. With that said, I want to announce that I am back on "the horse" and will once again begin to deliver to you once again real estate content from an industry-insider's perspective. 

I have been blessed to have had the opportunity to try my hand at a few occupations and have had success in a couple of careers, but one thing remains consistent--no matter how far I try to stray, real estate is my calling. That said, I am going to begin to deliver content on a regular basis. In doing so, I will try my best to both be more technical, as well as more topical and will look to strike a balance between the two. 

It's great to be back at the Real Estate Think Tank and like a pair of well-worn jeans, it just feels right!

Yours Truly,

Stephon Martin