So what needs to occur to get more African Americans involved in real estate investing nationwide?
A best-selling author of Investing In Rental Properties For Beginners, Phillips says she personally has found success in training Black investors in a culture of targeting undervalued Black communities, ethically and responsibly (not gentrifying). This way, she added, the cost of entry is a lot lower with homes that run anywhere from $20,000 to $50,000, offering a much lower startup cost.
And if more Blacks were involved in real estate investing, it could potentially help them and their community economically.
Phillips says she has seen investors go from one rental property to 10, and are now major players in the local REIAs (real estate investing associations) and active politically and judicially as homeowners. “We have also seen a pooling of resources, noting which banks are Black investor-friendly (meaning, more likely to give a mortgage loan), as well as which cities and municipalities are investor-friendly,” she says.
“Also, having investors in vulnerable low-income minority neighborhoods who are sensitive and conscious of not escalating rents in order to not displace residents, is having a positive effect individually on streets—this is really grassroots level, which are the best way to get change in my opinion—on our own, not waiting for government or outside validation.”
For Black investors looking to get higher returns from the investing world, Phillips offered some tips:
1. Focus on word of mouth recommendations for banks, lenders, appraisers, real estate agents, educators, investment groups, etc.
2. Focus on portfolios that align with your pocketbook. If you have $10,000 to invest in a property, focus on properties that cost $20,000 to $50,000, generally in minority neighborhoods, and learn how to ethically invest in long-term rentals for relatively low down payment amounts but extremely high cash flow.
3. Ensure you are receiving guidance and education from investors who understand and can speak to navigating the racialized components of getting funding and implementing strategies.
4. Learn how to find these low-cost markets, be it an hour’s drive away or a plane trip away, and learn how to successfully manage them through long-distance investing so you can easily achieve great deals without having to manage it hands-on.
5. Show up in the energy so you can create the business that you have always wanted, and financial freedom, and give back and stabilize communities at the same time.