Making Commercial Moves

July 15, 2007

Jim on Black in Business asked “What are we known for?” For me, it seems that we’re just known for our athletic ability. In a follow up post, he suggested that “being great” should be our business niche. I think this is a worthwhile goal to have in general, but it doesn’t really help us begin to achieve wealth as a whole. As I’ve said before, the main thing holding us back is the unwillingness to work together. Once we get past that, we can all achieve so much more than what we have now.

The Black “business niche” has become an interesting idea to me. Last week, I met up with some young black professionals and we were talking about how we all need to come together. In our region, there is no reason that with our resources, we can’t have a Sweet Auburn here. But I think I have a business niche for Blacks, commercial real estate. The article about Indian-Americans controlling 43% of the hotel industry is what got me thinking about the commercial market.

Think about it, a lot of black businesses own their own barbershops, hair salons, restaurants, doctor/dentist offices, etc. These are all commercial properties. To get started, if you already own your building, you just need to start another company and transfer ownership of the building to that company. At that point, you can pay rent to your new company. In the future, this could be useful if you decided to sell your business, but still receive rent payments through your commercial real estate company.

Now, imagine if the barbershop and hair salon owners got together and bought a larger building and used a third company to own the building that they both paid rent to. You could take this income and buy other buildings. Sell those, and buy larger buildings. Eventually, you could own some of the largest commercial properties in your city or region. This would work with doctors, dentists, professional services and other businesses.

This is just an idea, and I’m sure its a tad bit more complicated than what I described. However, this is what the Indian-Americans did with the hotel industry. They started with the corner hotel that had twenty rooms and traded up. They then brought in family and friends and pooled more money and bought larger properties. Forty years later, they own 43% of the market. If they could do it, why can’t we? Why can’t we own 35% of the entire commercial real estate market? They aren’t making any more land, and real estate is an appreciating asset. All it takes is us coming together and combining our resources. This is a plan I will be seriously looking into within the next two years. Wanna join me?


Catchphrase

July 12, 2007

My entries for Violent Acres Catchphrase contest.

1. You’re just dumb for no damn dumb reason.

2. I can see your point, but I still think you’re full of s***.

3. I’m already visualizing the duct tape over your mouth.

4. I have plenty of talent and vision. I just don’t give a damn.

5. You are validating my inherent mistrust of strangers.

6. I will always cherish the initial misconceptions I had about you.


Sub Prime Lending = Foreclosure

July 12, 2007

I’m starting to see a lot more articles like this:

More than a quarter million black and Hispanic families are expected to lose their homes in the next few years due toforeclosure. For many, the financial trouble will be traceable to a mortgage they should never have been given. MarketWatch

I talked about people living beyond their means in an earlier post. It seems that this sub prime lending issue is a lot bigger than I thought. To put 250,000 families in perspective, that’s more than the entire population of Raleigh, North Carolina.

Home ownership is a key ingredient to wealth. Buying a home that you can’t afford really throws a kink into achieving said wealth. From what I’ve been reading, a lot of these people have gone through mortgage brokers to get a home loan. Now, I’m not saying that mortgage brokers are shady, but I am saying that they aren’t the only people that offer a mortgage. In my experience, mortgage brokers have higher fees and higher interest rates. They offer the lower rate to bring in the customer and then slap on the fees and fine print that makes the loan a disaster waiting to happen.

People that do not know more than how to spell “mortgage” should not be getting an adjustable rate mortgage. It’s a financial tool that should be used by people with at least basic financial knowledge. When I hear about people that didn’t know that their mortgage could go up 30% in three years, I know that they had absolutely no idea of what they were getting into.

Unfortunately, it seems that these loans were the only way minorities could see themselves achieving homeownership. The sad thing is, if they got just a little education about buying a home and how mortgages worked, they could have saved themselves a lot of heartache. It doesn’t help that minorities are targeted for these “good deals.” Like momma said, “If it sounds too good to be true…” Also, if a sub prime lender is the only one that will give you a loan, then you really shouldn’t be getting the loan.

Personally, I used to have an adjustable rate mortgage, so I understand their appeal. The difference is, I did my research and switched back to a fixed mortgage once the rates had dropped back to the level I was waiting for. Also, my home had enough equity to where I could get a loan for up to 80% and still live comfortably. My parents gave me this rule when buying a home or car:

A home should cost no more that three times your salary

A car should cost no more than twice your salary

In practice, I haven’t gone close to that high on either. If only those 250,000 families had spoken to my parents first…


Sweet Auburn

July 6, 2007

We have now returned from my family’s reunion, which was held in Atlanta this year. I must say, I was very surprised with how “black” Atlanta is. I knew a lot of young, black professionals moved there, but I still didn’t expect to see so many in one city. It was a nice change. Seeing successful black folks has always warmed my soul.

 

While we were in Atlanta, we visited the King Center. Talk about a powerful experience. Seeing the grave site, clothes and mementos that he owned just made it more real. It’s one thing to read about Dr. King; it’s quite another to see just how “real” he was. I recommend that visiting the memorial site should be on the agenda for anyone going to Atlanta. Hearing his voice in Ebenezer Baptist is very heart-stirring. Unfortunately, we didn’t get to tour all of the Non-violence display. What we saw, however, was enough to get our blood boiling. That display made me appreciate the sacrifices that were made for me to be where I am today. It also made me resolve to get off my tail and strive for the goals I’ve set for myself.

 

Our guide told us that Auburn Avenue (Sweet Auburn), where the church and memorial are located, was once the epicenter for affluent blacks. Now, the wealthy blacks have moved to the suburbs. I think this is very important in that the black community’s wealth is no longer centralized. This seems to have happened in most of the major cities. I’m not sure what we can do to regain the closeness and vitality of our communities. But wouldn’t it be nice if we had a lot of “Sweet Auburn’s” across the nation?