It’s Time To Buy Back The Block, Millennials: Housing Experts Explain How
Millennial homeowners, Aèkeam Right and Jeff Badu, both saw becoming homeowners as an important way to take control of their own lives and build wealth early.
According to an article from AARP, only 18 percent of men and women from ages 18 to 34 say owning their own home is one of the most important things to achieve in their life.
Right, 29, purchased his first property at the age of 23 and today has five properties.
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“For me, it was purely math related,” Right said. “I realized that for what I was paying for in rent, that I could own a house. This was right after the crash of the market and stuff, and so properties were pretty cheap. For the price that I was paying to rent out, I figured out that I could own a house for a little bit more.”
“A lot of people just wait too long in the home buying process, and they end up just pretty much throwing money away every single year,” Badu said. “You might as well just put it into a property if you plan to buy one.”
A number of millennials in the black community may be unaware of how to get into real estate investing as a way to generate wealth for themselves and future generations. One possible reason is they are not equipped with the proper resources to gain the appropriate knowledge.
“I think everyone should own a home as soon as possible,” Lori Gay, president and chief executive officer of Neighborhood Housing Services of Los Angeles, said. “I’m that person, because building wealth takes time. Certainly, for young millennials of color, the challenge you run into is that many cultural groups do not have wealth being passed down to the new generation. So you better get started as young as you can with a wise investment strategy.”
The first things millennials should think about before they invest are identifying what they want and what their end goal is, Gay said. She recommends that you should determine whether you wish to own a home, make money by flipping properties or rent out housing units. Once you decide, it will change the way you deal with real estate and properties in general.
Personal finances are also an integral part of the real estate investing process.
“Money, credit savings and income are the three things that are reviewed to figure out if you’re a good potential homeownership candidate,” Gay says. “What does your credit look like? How much money are you making? How much do you have saved? And if, in fact, you don't have the typical loan that’s 5 percent down, then the question is what are the loan types that are out in the market that might fit you.”
“You want to be able to enter the game wisely; you want to be able to know what your end result is that you’re seeking,” Gay added. “Then you want to plan the work, and work to plan and take your time. So it’s balance, and I think a great homeowner is someone who’s planned strategically and executed that plan.”
“You have to think about the other things that you should be saving for,” Persaud said. “You have to be able to put money away, not just for a home purchase, but also at an early age you should start thinking about money you’re putting away for saving towards retirement.”
If you haven’t saved, then Persaud suggests you do more planning. He also believes that millennials must consider factors such as the stability of their career and how long they plan on living in a particular location. Persaud says if you’re going to buy a place, you should live there for at least five years.
Gay also expresses her take on the efforts of rebuilding communities and creating mechanisms for community empowerment and ownership. She believes that if properties are passed down to you but are overridden with debt and in poor condition, sometimes it's best to sell to an investor. But if other situations arise and you are presented with the option of keeping the property in a specific neighborhood, it is up to you to decide whether you want to move back into a neighborhood that may be considered more at risk than another.
“That sense of legacy, the sense of community commitment and the sense of place is very powerful,” Gay said. “I would never write off what may be considered a tough neighborhood. You have to do what we call an asset map in the neighborhood and figure out what the assets of that community are. If they’re outweighing the negative elements, you’re in great shape.”
Right is actively working on buying property in his hometown as a way to rebuild communities. He wants to help his city out in a meaningful way by purchasing property in gentrified areas. Right plans to have control of who he sells the property to and is aiming to to make sure that affordable housing is available to residents.
“Well, obstacles, I think, are what you see when you take your eyes off the goal,” Gay said. “The consistent thing is the struggles with credit and the struggles with saving, and in a high-cost market like Los Angeles, sometimes people just don’t have enough income.”
Black millennials have to consider the overall wealth gap between black people and other races when considering property ownership, as well, according to Persaud.
Both experts strongly advise millennials to seek out resources to help their investing journey be as smooth as possible. Gay always encourages people to get financial advice from reputable sources. She also advises millennials to seek homeownership counseling and to take classes from local nonprofits that teach the process of buying a home to figure out how to develop the best business strategy and to stick to it.
Badu took advantage of various resources while on his journey. He suggests that people should check out YouTube videos and books. Badu learned a lot from online articles and speaking to other homeowners like his sister.
Overall, one of the biggest tips both Gay and Persaud emphasize for black millennials is to know their money and their fundamental cash flow.
As for advice on how to execute a solid budget, Gay suggests to set it up in a way that allows for savings for other major milestones.