Previously on the Millionaire Podcast I had the opportunity to interview Paki from Hoodestates. This was a great and powerful interview. One of the best and most listened to interviews we have ever done. From that interview Paki and I have maintained a friendship and as a result I will be serving as one of the advisers in the Hoodestates elite platform. Looking forward to sharing my knowledge and elevating my people.
The reason that interview resonated with so many people I think is that so many of our listeners were raised in the hood or have family that lives in the hood. Unfortunately, when I mention hood investing to people like my mom they shudder. The idea of putting hard earned money into areas where people don’t take care of things seems like throwing money into a pit. Its not though and this short blog will tell you exactly why.
If you rehab it they will come
In certain areas there are people who just don’t have the extra money to throw multiple thousands at life’s issues. This can be the roof, the furnace, the flooring the paint. They are barely getting by.
What I have found though is that people like nice things, period. If you create a nice space even if its in a not so good neighborhood people will be lining up to rent from you. To you the neighborhood is scary but to them, its just life.
Now you don’t have to go crazy on the rehab. You don’t have to give them expensive floors counters and finishes. What is required is that the place is clean, safe, and functional. You would be surprised how nice you can make a place look for very little money. This can be the vinyl that looks like wood, some good carpet, and a paint job and you can then call yourself a luxury rental just like the big guys. LOL.
Seriously though, if you throw 5-10 grand at a dilapidated home you will be well rewarded with cash flow forever, forever ever. Don’t think that just because YOU are scared of an area that other people who might not have the same choices as you are also scared of the area. People tend to find a way to cope.
The popping market is the market that you invest in
The reason why the hood is the hood is because nobody invests in the hood. You know what separates old Brooklyn from new Brooklyn? People who invested money into that area. See people are always looking for the hot market or the hot stock and the answer, just like in politics, is to follow the money. You can follow the money in if you want, or you can be the master of your fate and become the money. Money is the solution though not good feelings or equality. America is a capitalistic nation.
Stocks and real estate improve because of high demand. In real estate, people are always looking for a nice place to live that is rehabbed and attractive. The wise person will realize that if you put your money into making a community great again you get demand. It doesn’t stop there though, you must then reinvest your money and upgrade things so that you keep the demand strong. This is not a one and done here.
The popping market is the market that you create.
Another key point is that there is a market for every budget. This is a huge hack and I can’t believe I told you the hack. See the benefit of having a podcast is I get to talk to a lot of dope people. I talked to Sterling Spencer who owns over 100 rentals in a low cost market and has been successfully renting to working class families for years. He found a market for his budget instead of sitting in his market or like me, my market in Orange County, CA he got to work.
The market is where you put your money. We don’t lose because we buy in the wrong market. We lose because we don’t buy in any market.
This point right here is so key because it demonstrates that YOU are the master of your destiny. If you want to make your community great, put your money where your mouth is. A perfect example of this are the gleaming churches that exist in the hood. The hood can be dilapidated and falling apart but the church will be well built, manicured and in great condition. How is this so in Donald Trump’s America? Well, it is that way because people continuously pour MONEY, not prayers, into the church. Your tithes, your offering, that building fund money are what uplift that building.
The same can be true for your community. All it takes is some thought. If instead of buying sneakers, cars, alcohol and drugs we invest that in painting buildings, keeping lawns groomed, picking up trash, investing in community patrol, our community can look just as good. With that good look comes high demand of people who want to live in an attractive community with low crime, good schools and clean streets. That demand creates appreciation. That appreciation creates wealth.
Your competitive advantage
Whether you know it or not, your connection with your community gives you a competitive advantage. You know the people, you know what’s a good area, you know the key players and the business owners. You know who has lived there for years, you know the history of the community. There is value in that knowledge.
Your competitive advantage is that you can successfully invest in areas that other investors can’t. Where they might have an advantage in their community (korea town, china town, downtown) you have a huge advantage where you are. It is up to you to exploit that advantage and use it to make you wealth.
There is nothing wrong with having an advantage. In fact, the wealthy seek out advantages. Only losers wan’t equality. It’s like Grant Cardone says “I am always ethical but never fair”. Fairness and equality are a myth. You have an opportunity to make boatloads of money dealing with tenants who look like you, buyers who look like you and families who look like you. Because they look like you and have similar experiences as you this allows you to do better business and make more money WHILE improving their lives and yours. This is your advantage. Monetize it.
This is your advantage because they will shut out other cultures and other cultures will shut them out. This deals with lack of trust and lack of respect. Dealing with people who look like you tends to engender a better relationship. Black tenants need black landlords. It lets them know that when you tell them no, or what the lease says, or what the owner has decided, that its based on the facts and not on skin color. The skin color scape goat is too easy to fall on and it hinders, growth, accountability and prosperity.
Somebody has to rent there
A lot of people will tell you that you shouldn’t rent where you would be afraid to live and I say that is stupid. That is like saying you shouldn’t sell sneakers that you don’t like. The end game here is money not “what you like”. In fact this is one of the most common mistakes that business people make. Most people start a business around what they like and what they enjoy and then they try to push it on the market. The smarter way is to create what the market wants.
There are some people who might not be as educated and refined as you and they might be ok with living in the certain areas. Who are you to not provide that housing for them? Smart business people chase needs and there is a low income person that NEEDs low income housing. We are in the tenant business not the preference business. Somebody will be willing to rent whatever you buy and rehab. I promise you. Our prospective tenant list that is over 40 names long says so.
If you are interested in joining any of our clubs and making a difference in your community, email firstname.lastname@example.org if you haven’t yet done your taxes or haven’t created an LLC to organize your hustle, do so now! Email email@example.com today!
Be great and invest well!