Home Ownership: The #1 Way to Build Wealth

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Episode Transcript

Speaker 1 (00:00):
Welcome The Money and Wealth with John O'Bryant, a production
of the Black Effect Podcast Network and iHeartRadio. Hey, Hey,
this is John O'Briant and this is the Money in
Wealth podcast and we're going to break some serious myths today.

(00:23):
On this episode, we're going to deal with an issue
that I thought was settled and the data would suggest,
and my conversations with people as I go around the
country and around the cities and neighborhoods would suggest this

(00:44):
is more than not settled. How do you build wealth
in America? What's the number one way? Maybe more simply,
should you become a homeowner? Should you be a homeowner?
A lot of folks, to my surprise, particularly a lot
of young people, have said the answer to that is no.

(01:05):
They don't want to be a homeowner. They've been told
by the so called wealthy and so called successful that
they shouldn't be. Don't waste your time, don't waste your money,
people tell them. The title for this episode is home
ownership the number one way you build wealth in America

(01:28):
and how you can start right now. More so, I'm
gonna get into why you should start right now and
what are the steps to starting right now, We're gonna
get into this in a very deep way. I'm gonna
break this down because everybody tells you to get rich,

(01:50):
more so how to be wealthy, which there is a difference,
but they don't tell you how, and folks give you
a lot of slogans and a lot of messages which
you're wrong. And worse, some people are actually lying to you.
I have not quite figured out why they're lying to you,
although reads probably one of the motivations to turn everybody

(02:16):
into renders. That's another topic for another time. One could
argue that somebody has a plan that within five years
or so, that sixty percent of everything in this country
or more should just be rented, and people are just
paying for the experience, whether it's renting a vacation, or

(02:38):
renting a night out, a overnight stay, or renting a car,
or renting where you live. I'm not making a value
judgment here. But here's the problem with this argument that
is being made. I'm not arguing with whether I mean
I'm a landlord. I built one of the largest portfolio

(03:01):
of rental home ownership or rental property, single family rental
properties by a person of color in the country. So
the company about three years ago, embedded in a lot
of financial literacy and a rental owned program by the
way into the model. But that's sent aside. So I'm
a landlord, why would I want you to rent? I'm

(03:22):
about to do another business venture in real estate around
a multi family while when I want you to rent
because I want you ultimately to be free. Everybody coming
up probably worked at McDonald's or someplace like that convenience store,
faster restaurant. But that doesn't mean unless you just love
that industry you should stay there forever. Here's what I

(03:44):
find odd about. So the world should be a sort
of a stair step, right, so you rent until you
can afford to own. But you find really odd, first
of all, about the folks telling you not to own
a home. If you look on television to all the
talking heads telling you out to own a home, do
a little research and you'll find that every one of

(04:05):
them owns a home. I'm just laughing because the extreme
irony of this, it's almost just purely insulting. Actually, everybody
telling young people and strolling people and poor people and
even middle class people that they shouldn't own a home. Well,

(04:28):
those people overwhelmingly ninety nine point nine percent of them
own a home. Here's the simple fact. Renting keeps you broke.
Ownership owning starts that climb. Median net worth of renters
in this country in America. I know the podcast is global,

(04:52):
but I'm going to deal with America here first, and
then you can extrapulate this data to other developed countries
because a lot of this data is similar. Median net
worth of renters in America sixty three hundred dollars, median
net worth of a homeowner in America, hold on your
boots two hundred and fifty five thousand dollars. Homeownership gap.

(05:20):
Forty four percent of Blacks Americans African Americans own a home,
give or take, compared to seventy two to seventy five
percent of their white counterparts. And this is not because
people who are of a different hue take a different
intellectual queue. As my friend Michael Milkin would say, intelligence

(05:43):
is equally distributed, but opportunity is not. So a lot
of the wealth gap in this country. If you look
at black and white as the bookends of wealth disparity,
which I think is pretty fair, a lot of that
is captured are not captured in home ownership. Here's a

(06:07):
hard truth, a very simple one. The number one way
you build wealth in America is home ownership, period, full stop.
There are three things that have never gone down in
American history. Home ownership values, stock market values, American GDP

(06:27):
Gross domestic product, the income of the economic activity of
the nation. GDP is about thirty trillion dollars today, probably
about a fourth of global GDP. Of all GDP, you
can put the top two or three economies inside of

(06:50):
a bucket, and put that bucket inside of the American economy.
What's the engine of the American economy? Or I tell
you stock market. Yes, it busted in the Great Depression,
but it came roaring back. Home Ownership has had several

(07:10):
burst including the two thousand and eight economic crisis that
even I got caught in. I'll explain that in a
moment when I tell you my own personal story. And
there have been crisis before that, but real estate kept
home ownership in particular, kept roaring back. So stock real

(07:32):
estate will go up in value. Nothing is guaranteed. It'll
hit some wall. There'll be a recession. Okay, it recedes,
that's what ress. Recession recedes. That's what that means in
layman terms. It recedes, it pulls back as an industry,

(07:52):
as a sector in this partic case as relates to value,
but then at some point it corrects and resets above
the line. I repeat that the country's real estate home ownership.
Think about the Texas real estate that you could almost
give away twenty five years ago, twenty years ago, something

(08:17):
like that. Think about Detroit right across the street from Canada,
right on the water, here's a dollar for a house.
Think about all these places out Las Vegas where people
like it's over, it's done. Miami. They came roaring back,

(08:40):
oftentimes eclipsing former valuations of that same house. They go
up in value, they receide. Poor people sell on the dip,
by the way, lack of financial literacy, lack of confidence,
and then the real estate recovers in time above the line.
Let me tell you my own personal story, because I

(09:01):
think it might resonate with you. I'm going to tell
you the most recent story first and then go backwards.
So not the seven hundred homes that I owned through
a company I sold the Promise Homes Company. I'm still
a shareholder, but I'm like a limited partner. Somebody else

(09:22):
owns it and runs it in the last three and
a half years, but I built that company from zero
to about one hundred and fifty million dollars of market value.
Before that, I had one house, and before that I
had a small condo townhouse. I also owned a three

(09:48):
unit apartment building that my father stayed in in dignity
the last years of his life. But let's stay focused
right now on my condo townhouse. I bought the condo
townhouse two thousand and six ish, I believe that's the date.

(10:08):
The date ranges, but around that time, right before the
economic crisis, I paid about two hundred and twenty thousand
dollars for it. As I recall, it's about fifteen hundred
square feet seven one two two Lati Heir Boulevard. You
can look it up. It's worth over a million dollars today,
I'm told. But anyway, I bought it for two hundred

(10:29):
and twenty thousand dollars. It was fifteen hundred square feet
and I lived there and there. Recession hit, the economic
crisis hit in two thousand and eight, the mortgage crisis,
and all of my friends, let me insert my broke friends.

(10:49):
They meant, well, but it is what they didn't know
that they didn't know that was killing them, but they
thought they knew. Always consider the source for your advice
if you're going to take it. People can love you
and give you bad advice, or they can manipulate you
and give you the advice that benefits them. To rationalizes,
to tell rational lies. So my broke friends were saying,

(11:10):
sell sell, sell rices are going down. When I tell you,
poor people sell on the dip. Warren Buffett once said,
if people are greedy, be afraid. If people are afraid,
be greedy. So people were afraid, and all of my
friends quotation mark were telling me to sell. I thought, rationally, well,

(11:32):
I got to live somewhere. Why would I sell the
place I'm I own? Like, okay, the values are not
what I want them to be. You know that can
self correct. But I live in this place, so I'll
just stay here and ignore the praise value. The praise
value had dropped into the ones. I think it was
about one sixty or so, one sixty one seventy one eighty.

(11:56):
I bought it for two twenty. Ignored the noise. That's
one of my habits. By the way, one of my
success hacks is to just ignore the noise in my
life and around me. I mean, just walk through life
constantly oblivious to most things around me because it just
doesn't matter. I am encouraged about two thousand and nine

(12:20):
by my mentor, Ambassador Andrew Young and one of his friends,
Sam Bacote, to move to Atlanta for a range of reasons.
I decided to take them up in their offer because
Ambassador Young was my absolute hero, still is to this
day my role model, and he sort of took over
the road from Reverend doctor Cecilship Murray in Los Angeles

(12:42):
of raising me as an adult, mentoring me into leadership.
So I moved to Atlanta, find a place there and
buy it and rent out my LA condo townhouse to
a LAPD police officer who didn't pay rent on time,
I might add, but as long as he paid rent,

(13:05):
that was fine, and I had to cough up the
property tax payment once a year when that came due,
but other than that everything was covered. The mortgage was covered,
in fact, most of the property taxes were covered. Also
the small out of my pocket for me forgot about it.
So two thousand and nine goes By twenty ten, goes

(13:27):
By twenty eleven, goes By twenty twelve, goes By. I
would have to chase the guy every now and then
for rent, but he always pays. Oh eventually, I always pay.
My mortgage credit score is great. Minor changes of you know,
there's a fosces that goes bad, or a toilet that
needs unplugging, you know, unclogging or something. But keep in mind,

(13:49):
by the way, no one washes rental cars. So when
you own a house or own a property, you're gonna
be stuck with the maintenance bill. But that's fine. You
also get all the benefits of home ownership, which I'm
gonna get to in a moment again, follow the story.
So I pay these maintenance things. I'm paying property taxes,
he's paying me rent. It all sort of basically evens out.
I didn't really make much money, any much money net

(14:11):
net net on cash flow. But you know, this is
my asset and I own it, it's in my name,
and I believe in real estate a long term, so
I just kept it. So now I was twenty thirteen,
twenty fourteen, twenty fifteen, and twenty sixteen, and around this
time me and the family decided we wanted to switch

(14:34):
up from the house I was staying in in Atlanta.
I'd bought a house in Atlanta and wanted to buy
a family home. And this family home needed a lot
of work. It was owned by a famous celebrity but
had been abandoned for years. The infrastructure was solid, the

(14:56):
bones of it were solid, but it needed a lot
of help. And we bought the house. Well, we wanted
to buy the house, but it was seven hundred and
fifty thousand dollars in twenty sixteen ish. Try to figure
out how to you know, buy this house. I wanted

(15:20):
to keep the home I was staying in at that
point in Atlanta. So I called a broker in my
Morris broker, African American man Daniel Lowe, who at some
point I have on this podcast. I call him, Hey, Daniel,
what do you I can sell that condo townhouse for
in Los Angeles? Mind your bought it for two twenty

(15:41):
last time I checked, the value was one sixty one
eighty ish. My friends had told me to sell it.
He says, Oh, I can probably get you about seven
hundred and fifty thousand dollars. I said, excuse me, what
did you say? Can you repeat that again? Is the
line gone dead? Here? And I just hear? Did I

(16:03):
just hear through an echo? Did you? Did you? Did
you say one hundred and fifty thousand dollars seven hundred
and fifty thousand dollars. I said, how quickly can you
sell this property? He said, I could probably get it
so in the month. Excuse me, Yeah, the market is
hot for this kind of property. And he's got a
great location at Latihera, near the four or five freeway,

(16:30):
which was near economic activity. That's why I always tell
you near transportation, near economic activity, et cetera, near growth.
So I said, sell it, I mean, yeah, sell it
for me. So he sell, He lists the property, and
within one month, true to form, he sells this property,
transfers the money to me. And there's a something called

(16:52):
a ten thirty one tax free exchange, which means that
you can take the proceeds from a piece of property
and sell it into another property, buy another property without
any tax hit what soever. Zero. This again, this is
the magic of real estate. So I made a capital

(17:12):
gain of at least five hundred thousand dollars, which was
a huge surprise, and I didn't have to have to
pay a dime of taxes on that five hundred thousand
dollars net proceeds. Well. Yeah, after I paid the mortgage down,
because I shifted that into buying a new property this

(17:33):
particular time in Georgia. I then take out a mortgage
with a construction loan or rehab loan on the new property.
And without telling you too much of my family's business,
let's just say that that new property is doing just fine.
And I mean like multimillion dollar fine right now. I'm

(17:59):
not a genius in that example. I didn't pick up
and moved the property in La Tourner the location. I
didn't rehabit, and I didn't do any fancy. I just
kept it and paid the property taxes and paid the
mortgage on time, and made sure I repaired the saint
when it ever got clogged. And my upside was a return,

(18:22):
that a legal return that rival was anything in almost
any business transaction you can imagine, certainly as a passive investment,
it was extraordinary. You've got to admit, these numbers are incredible.

(18:48):
I called Daniel back, and mind you, the only money
was at risk of mine in this situation was the
original down payment on the Coundo townhouse for two hundred
twenty thousand dollars. Let's just say I put twenty percent
cash down. I'm sure I get put ten percent, but
let's just say this it was forty percent. That's a

(19:08):
maximum forty five ish thousand dollars. Probably it was more
like twenty twenty five thousand dollars, and that down payment,
along with me paying occasionally some maintenance work over the
next eight years or so, facilitated a sale for seven

(19:30):
hundred and fifty thousand dollars, most of which was net
to me in profit. Think about that twenty to forty
thousand dollars translating into twelve x that in profit with
no tax bill. That I then rolled into another property,

(19:52):
took out again another loan which was tax beneficial. Explain
that again in a minute. Were I was also not
hit with a tax bill legally, and it went up
in value considerably and is now clearly in the seven
figure club. So much for somebody saying that owning a

(20:15):
home is a bad personal investment. Let's back up now.
My mom and dad fought over money, wanted the Samoth
Johnny will Smith, wonderful human beings incredible role models in
many way, But my dad was finitially illiterate and wouldn't

(20:37):
listen to my mother unfortunately, who was a great investor.
That together they would have been excellent if one made
the money and one invested the money, one used their
income to invest in, one use their the other use
their income just to pay the household bills. But they didn't, unfortunately,
get along like that. We owned in spite of their

(21:00):
frustrations with each other. We owned a gas station at
Vernon in western South East Corner still the end to
this day. We owned an eight unit apartment building on
Santa Barbara Boulevard now called Martin the King Boulevard. We
owned our own home on that same street. We owned
a nursery business, a semi at contracting business. The apartment

(21:24):
building we bought for eighteen thousand dollars give or take
an eight unit apartment building. We would live in one
unit and the rest was profit. We bought this unit
for eighteen thousand dollars in Los Angeles. Last time I checked,
it was worth eight million dollars. We lost it all.

(21:46):
You could make the mortgage payment on that eight unit
apartment building from rent from two of the eight units.
We lost it all. Now, my dad was a hustler,
he was a businessman. The difference between a hustler and
a businessman, by the way, or a business woman, is paperwork.
My dad did not want to do and bother with paperwork.

(22:11):
Financially illiterate. They argue, they fought domestic abuse number one
costs from divorces. Money that were costs to domestic abuses. Money.
They fight, they go their separate ways. My mother is
California's the community property state. She could have taken it
for everything he had, particularly she had the kids with her.
What a decent, amazing woman. She just left with the

(22:34):
literally closed her back and her two kids. One kid
had gone to the military. There's a reason they got
into a fight in the first place was my dad
took the four thousand dollars my mother saved, and he
wanted to go on some fancy new idea of his.
And she was trying to send my brother to a
college of his choice so he could be anything he wanted.
But when my dad did that, my brother, Donny Dave

(22:56):
Daniel Harris, Donny had to go into the military or
get a four year education. Okay, it's another podcast for
another day. But my mother then went to go live
with a girlfriend because well, she wanted financial freedom on
her own terms. So now my dad has all these assets.
Now he's got the apartment, take power, financial literacy. He

(23:16):
has a home, he has a eight en apartment building,
he has the gas station. Then he's got these other
businesses in the semen contracting business. So hold that. Okay,
park that for a minute. My mother has nothing works
in an hourly job, a McDonald's aircraft and boring aircraft.
So having the real estate's not enough. You need financial literacy.

(23:39):
You need you need to you need paperwork. You need
to understand how this system works. You need understand how
the tax system works. The entire taxism in America is
designed to support home ownership. Hello mortgages. When you get
a thirty year mortgage on a home, twenty of that
thirty years on average, twenty years of that thirty year

(24:02):
mortgage is tax deductible. You write it off. You get
the money back all apart in a tax refund on
your tax as long as you itemize your tax, your
tax returns, check your tax pro on this. Don't just
listen to me. You get the value of depreciation. If
it's an investment property, you write that off, you get

(24:23):
the value of appreciation. I've already described that. That's when
the value goes probably goes up in value, and you
pay no taxes on that. But check me the tax
pro if you do a tax a ten to thirty
one tax free exchange, if you're married and you file
tax returns together, it's as much less might check as
a half a million dollars in free equity when you

(24:45):
sell that house, not a tax exchange. Sell the house
a half a million dollars of free capital gains capital
gains tax capital gains. That's different from W two incompaies,
which is around your payroll. Okay, capital gains is what
it sounds like. Capital gains when you can do capital
gains on stock. Okay, capital gains on a business you

(25:08):
sell it, capital gains on stock, me sell it, capital
gains on her home when you sell it. Okay. So
my mother goes to live with her girlfriend tells me
it's my aunty by the way I go, and and
this you know, I'm making a long story short. We
had some trauma drama. As I was staying with him,

(25:29):
I fall on the porch was swallowing my tongue as
choked to death. And Uh, this guy Oc who we
lived with, who had a I don't owner he owned
the house or he rendered it, but he took care
of the house with his girlfriend who was my was
my mother's friend, and he should have sent out with
my mother and said, look, I can't afford to take
care take care of your family and mine. Can we

(25:49):
have a family meeting once a week. Can we talk
about the money, split the bills. You pay this bill,
we pay that one. That's what my mother would have done,
but no one ever asked her to help. My OC
decide to just go. You know, he's got a full
time job, but he decides to go around the corner
cellth marijuana. Anyway, I saw him murder in front of
me by the drug dealers for whom this was his
real territory. I'm getting doing the story really quickly, because

(26:12):
this is not about my story. This is about owning
the home and why it's important how to do it.
So my mother gets earns enough money, saves enough money
from living with her girlfriend. And this gentleman who unfortunately
lost his life because he over money, and I saw
it all as a young boys. They was six ish

(26:32):
and my mother buys a house in our first our
first home in one five five oho too, South Freyley. Essentially,
when you buy a house, you remember the address. She
buys this, our first home in one five five oh
too South Freyley, without anybody's help, got a credit score
up right, and got a job, and it had saved
a down payment. She buys his house, Moda's house was

(26:55):
beautiful in Comple, California, and me and you mean, I
tell you my dad was balling. Now, so now let's
fast forward. At the end of the day, my mother
buys and sales seven homes, helps my sister buy a
house twice with the down payment, helped my brother buy
a house with the down payment. She's working an hourly

(27:18):
job now. He has a credit score of over eight
fifty back when it went over more than a fifty
against capped out of a fifty. Now. She bought all
over southern California and lived below her means. When she
passed away two years ago, my mother had a net
worth of one million dollars. Working an hourly job fifteen

(27:39):
to eighteen dollars an hour for thirty two years and
McDonald's aircraft now no's Boeing aircraft. My dad lost everything
everything I told you about, the house, the eight and
the probab building now worth millions and millions of dollars,
the liquor store, the store of the gas station, law

(28:00):
it all. In fact, I re engaged with my dad
as I was hustling as a businessman and my dad
was staying with a lady he didn't really like, but
she had leverage over him because she owned the house
that he stayed in, and so he was sort of,
I don't know, it was like a reverse pimping. He
was her first. He was a sort of I believe,

(28:22):
forced to be her boyfriend because he wasn't attracted to her.
It was obvious she wouldn't have She wasn't very attractive
in my view, and so I decided that was not
the way I wanted my dad to go out. So
I offered to buy the property from his lady. She
accepted the offers one hundreds some one thousand dollars or something.

(28:44):
I bought the house he was staying in. I knocked
down three walls. Remember I told you there was a
three apartment building that I also sold in la. I
walked and knocked down three walls, left one wall up again.
Financial literacy. If you leave one wall up, it's not
new construction, it's a rehab. Left one wall up. It
was zoned R three. My dad thought it was R four,
meaning four units. It was our three three units. It

(29:06):
was a single family home on a lot zoned R three,
which means a very valuable lot. I got a loan
from Wells Fargo construction loan from a friend of mine,
Tom Swanson there and unfortunately gave my dad the construction
loan proceeds and a credit card. And my god did
he blowed running that into the ground so badly, mismanaged

(29:29):
it so badly. I had to go get a refinance
other construction loan. Thank god th market what that point
was going up, I'd have been killed financially out at
a file bankruptcy. I went back to Wells Fargo. Thank
you so much, Tom Swanson, were having empathy on you
and grace in your heart. He refinands that dang on
construction loan and got me more proceeds to finish that building.

(29:50):
And that's why I always tell you never make emotional
decisions and don't do crap with family other than getting
a hug and some love and money you can afford
to lose. I put this lo own in the hands
of my dad. I knew he was financially and he
literally even though he was a great hustler, and he
fulfilled his promise of messing it up. I love my dad.

(30:12):
I love love, love, love love. I God rest his soul.
But boy did he screw this up and stressed me out.
And so again I and I didn't give an I
didn't give them that credit card. Again I had to
pay It was a six thousand dollars my X card
Express balance, and he run up in a month and
I had to pay that off. And that was when

(30:32):
sixty grand was everything to me. So learned a lot
of lessons. Right, business is not emotional, it's not personal,
it's business. And and so anyways, that probably also went
up in value, didn't go quite as value. It wasn't
as much. It didn't go up as as rapidly because
I had all that debt on it, because I had

(30:53):
to refinence construction a loan twice. My dad lived in
one unit. I took red from the other two units
that paid the mortgage and so he was live in
dignity and rent free as he got older. And think
about all the people are going to have parents getting older.
You need to be thinking about what I just told you.
So anyway, I cleared the decks on the two properties
I had in in la Is a third one, but

(31:15):
that's another story to that. I cleared the deck of
those two, sold them, took the net proceeds and transferred
it into Atlanta and the rest as they say, it's history.
Let me now come back to some facts. I want
you to pay yourself right. I want you to become
your own landlord. I want you to be in a

(31:36):
situation when nobody kicks you out of your house. They
don't have the power to do that. So I remember
a brother was I was giving a speech somewhere brothers
like John Sorry, talking about home ownership. I don't own
the house. The bank owns a house. If you don't
pay right, it's crazy. Like, as long as you pay
the mortgage on times, the house is yours, right, And

(31:56):
yeah there's a loan on it. But there's no billionaire,
no multimillionaire, no thousand are no by the way, city,
successful city, county, state, or government federal government that didn't
do it without good debt. Good debt is tied to
something that appreciates. Bad debt is tied to something that depreciates.

(32:19):
There are tax benefits to owning a home, mortgage interest deductions,
capital gains exclusion. I've discovered. I've covered some of that.
It's forced savings account. You know, every mortgage payment builds
equity in the house that you have with your name
on it. It's generational wealth homes or the number on

(32:41):
inheritance passed down in working families. And that's a key
phrase now, in working families. All these so called fancy
rich people. And I've got somebody in mind who says
stupid stuff like this. He lives in Miami. He's very popular.
But I don't want name his name. I'm not trying
to to demonize him or whatever. But he just gives
a bad advice talking about you know, you know, he

(33:04):
would never put money in a home, he'd only put
money in the business. Well, he's also worth forty million dollars,
I mean, so it's just it's crazy. But the average family, right,
do you want to rent someplace or do you want
to own where you live? It's just a common sense
to me, right, And when is a good time to
buy a house when you can afford it three percent

(33:26):
interest rates? That's not coming back, I don't think in
our lifetime, at least not naturally. The government wants to
do something because we have a crisis. They can they
can make rates artificially low. But rates were increased from
again free money one two three percent, which again I think,
which is an aberration. It happened during the mortgage crisis,

(33:47):
by the way, to a very reasonable five to six percent.
That's still very reasonable. I mean when my dad was
on the scene, my mother was on the scene, I
remember mortgage as being in the teens, like fifteen sixteen.
It was crazy. So these are not bad rates. Just
get used to it. And if you can afford to
own something, just buy it because it's only going to

(34:09):
go up in value. Real estate is just going to
keep going up. Like, don't let the perfect be the
death of the good. Just buy something somewhere. So let
me give you some historical context for why you have
a wealth disparity. To begin with, you had forty acres
and a mule that we know that story, but it

(34:30):
was only eighteen thousand families black Union soldiers who got
the benefit of forty acres and the mule, and they
that benefit was actually was four to one thousand acres
divided by eighteen thousand families as a pilot by Abraham
Lincoln Secretary of War Standing General Sherman. After the Civil War,
unfortunately Lincoln was assassinated and the people who took him

(34:52):
took over reversed Field Action fifteen, which was forty acres
and a mule. I don't know if you know that
it was reversed. So people are talking about black people
are lazy, It's just just not true. Right. They gave
us this really bad land down the coast. We want
beachfront property today, But back in the agricultural age in
the eighteen hundreds, the last place you wanted land was

(35:13):
on the beach. But we didn't complain about it. In fact,
we worked that land so hard in a month, they said,
my god, these folks are so industrious. Give them a mule.
Forty acres and a mule. The bank came the next month,
the Freedman's Bank, which I have the honors of be
going to tell you I'm the only American citizen ever
to trigger the renaming of a building on the White
House campus. It was called the Treasury, anex building for

(35:35):
one hundred years. It's now called the Freeman's Bank building
next door to my friends Michael Milkins Milkins Center for
the Advancement of the American Dream. By the time you
listen to this document, this podcast, you'll it'll be open.
By the way, m cad should go see it and
go visit the Freeman's Bank next door, which was the
location that Frederick Douglas sat in where he ran the

(35:56):
bank charted to teach free slaves about money Financial Literacy
Circle eighteen sixty five. So January was the land, February
was the mule, March was the bank. In April, unfortunately,
Lincoln was assassinated. The whole dream he had for emancipating
and empowering and educating empowering formally enslaved people fell apart,

(36:17):
and by eighteen seventy four that bank had failed because
white board members of that bank served as destined charted
to serve and dominis on the savings of blacks. By
the way, it changed the charter of the bank so
that they could borrow money and guess who they loan
the money. To themselves. Okay, never mind with the history lesson,

(36:38):
But that was what that's what happened to the only
time that blacks had a chance to get some land
after the slavery. Of slavery, it was only fo hundred
thousand acres. You might think there's a lot of money.
We're about to tell you about two hundred and seventy
million acres in a second. So that's that experiment. So
eighteen sixty two ish, here comes another act that it

(36:59):
was created to give those who are moving west an
opportunity to buy land. And that act transferred, the Homestead
Act of eighteen sixty two transferred over let's say a
decade at by the way, it was forty acres for

(37:21):
black people. This was about one hundred and sixty acres
each plot, and it transferred two hundred and seventy million acres,
not four hundred thousand acres, two hundred and seventy million
acres to struggling but enterprising families wanting to go west.
Ninety nine point nine percent of those plots were given

(37:45):
to whites, and there were government agents put in place
across the country to teach those white settlers how to
cultivate and work that land. Oddly enough, that land was
on was located in places where you can grow crops
of that day. It's certainly much better than the beachfront property.

(38:08):
It was given a Blacks that by the way, if
I didn't mention, it was taken back away from them
two years later, after Lincoln was assassinated. It was literally
the new president, President Johnson, reversed effectively build actually fifteen
and reconstruction, and all that land was given back to
the Confederate families that owned it beforehand. Can you imagine

(38:31):
the indignity of this. It gets worse though. I'm just
trying to explain to you the history, so you didn't
get that out of your system and we can move on.
If you have to be a personal color was just
put your bucket down right now and no more excuses.
I'm trying to explain to people who have privileged why
you are more than just smart, and those who don't

(38:51):
have privilege, why you shouldn't be just irritated. You should
be well. Success is a bridge. If you want revenge,
success is the best revenge. Just go do something because
people today didn't do this to you, right, so just
go get therapy for your anger, but move forward with
home ownership. But let's be honest about what happened. So

(39:13):
the Homestead Act May eighteen sixty two, a lot of
people to go go west, and you got one hundred
and sixty acres. You had to livered the land for
five years, you had to build a dwelling, cultivate the land,
and two hundred and seventy million acres, that's ten percent

(39:40):
of all American land was given to these families, and
most blacks were excluded, like there were like literally a
handful of plots given to blacks. So that's a huge,
huge wealth creation thing. About one hundred million Americans, mostly white,
benefit today from the Homestead Act land. Fast forward now

(40:01):
to the government having their turn at screwing over people
of color. That was the FHA nineteen well the early
twentieth century where they created red lining. It wasn't banks
that creator red lining, it was the federal government. They
literally said, we are not going to guarantee mortgage loan

(40:21):
in these neighborhoods. They're dangerous. Well, guess why they're dangerous
because the Freedman's Bank was upended and no one told
them free enterprise and capitalism. They were forced to go
into urban ghetto areas, and they put all the poverty
in one place with no jobs and no economic opportunity,
and guess what happened. People will need to live and
so they start stealing. Hello, it's sort of common sense.

(40:44):
By the way, poor whites did the same thing in
more poor whites American than por anybody else. That's a
different podcast for a different day. So the government blamed
poverty on the poor and told people to bootstep themselves
without shoelaces and refuse to ensure a mortgage in a
in a so called poor black neighborhood. But guess where

(41:06):
they insure the mortgages in a white suburban neighborhood or
a suburban neighborhood that happened to be white. Well, we'll
guess where the banks wanted to write a mortgage in
places where they were insured insurance from the federal government.
So we actually wasn't banks that were doing discrimination at
that point, it was a federal government. And where did
banks not want to write a mortgage in a place
that was proceeded to be dangerous where there was no

(41:27):
mortgage insurance. And that's why you'll see properties fifteen minutes
apart today to this very day, that are literally one
hundreds of thousand dollars in difference or more in value.
You'll have an underserved area where houses forty hundred thousand
dollars of value, and fifteen minutes away you'll have an
area where the home is worth three quarters of a million,
a million, two million dollars. And this was the root

(41:49):
of that. Okay, so those are the fundamental building blocks
of sort of why Well, then you have the GI bill.
This is a third punch in the nose. Blacks and
whites come back from World War Two, and something like
ninety two percent of all GI bill allocations went took Caucasians.

(42:12):
So a GI bill was a much education as much
education can shut down your throat, a skilled education for
a job for the future, and a mortgage to buy
a new home. And that overwhelmingly went up to also
white returning gis and God bless them for their service.
They didn't do this, the government did it, but blacks
were systematically turned down. Oddly enough, well, that created the

(42:37):
modern middle class. So voila. So they say, okay, that,
but now we're in a different time, and if you
get your credit score up and go to Operation Hope,
get your debt down to what we're telling you, get
your savings up. Whether you're black or white, or red
or blue politics, or you're urban or rural, it doesn't matter.

(42:57):
Operation hopeing can help you produce some green in your life.
It could help you get access to capital from one
of the biggest, most prestigious banks at prime rate today
and get you in the seat to own your own home.
In fact, a third of those that we serve to day,
well I think it's maybe twenty five percent of those
we serve today are in rural America. By the way,

(43:17):
we're we're serving everybody. We're serving Hispanics, we speak Spanish, Spanish,
we're speaking. We're serving certainly black communities, We're serving poor
white struggling, We're certain middle class communities. We're all across
the country. So now, whoever you are, we're here for you.
We have millions of clients and directed four point five
billion dollars in prime capital, half of which is that

(43:38):
is half of that is for mortgages. In fact, the
Fulton Bank, one of our partners, has done one point
two billion dollars in home ownership for Black Americas alone.
Just in the Pennsylvania I'm sorry, in the yeah, Pennsylvania area.
And then we're doing stuff with Wells Fargo and Bank
of America and our Home in Side locations and truest

(43:58):
Bank where we're seeing real results in getting people access
to capital or raising credit score fifty four points in
six months, lowering debt thirty eight hundred dollars, increasing savings
twelve hundred dollars for somebody making forty eight to fifty
thousand dollars a year, given a real shot at home ownership.

(44:27):
So it's not about feeling sorry, it's about catching up
with a plan. Right, This is a plan for you.
So let's now bust some big myths about home ownership.
You need twenty percent down, not true. It's nicely a
twenty percent down. But there are many many programs from FAHA,
oddly enough, the same organization that discriminated against blacks in

(44:49):
the early twentieth century. FAHA. You can get three point
five percent down payment assistance. You know, it's three point
five percent mortgage rate, sorry, and downpayment assistance programs available
through them. You can go to an FDIC insurance bank
and talking with them about their community reinvestment Act programs
and in some cases get a grant from them for

(45:11):
ten thousand dollars to help you with a down payment.
Did you know that? Yes, Operational coaches can help you
with that. Go on your Hope in Hand app on
your phone, or call the eight hundred number, or go
to our website Operationhope dot org and one of my
team members across forty two states will help you help
yourself at what fee zero. It's all scholarship for you

(45:33):
because we raise the money on your behalf. Okay, here's
the myth. Number two. My credit isn't good enough. You
may qualify it between five eighty and six twenty. But
through one of these government programs, if you're trying to
get a market rate prime bank loan, we're gonna get
through your credit score up to close to seven hundred.
But Operation Hope is doing that. In fact, if you

(45:55):
want to be patient, wait twenty four months, we'll get
you credit screw up one hundred and twenty points in
eighteen to twenty four months, will get up fifty four
points and six months on average. So you know, in
a world where you think that a lot of things
are not in your control, this thing, your credit score.
We can. We can move it with your help so considerably,

(46:16):
along with getting in your debt ratios down, get your
ratios rights to the bank will say yes, and we
know the criteria for which the banks will want to
say yes. We're the only nonprofit allowed to operate inside
of a bank branch in US history. Okay, here's myth
number three, and we're in all the major banks. Here's
myth number three. I'm not ready to commit. Well, renting
is a commitment to someone else's wealth building like mine,

(46:40):
So you're already committed. Don't let the perfect be the
death of the good. Just get in the game. Myth
number four, the market's too high. Well, the right kind
of buyas when you are financially ready to do so,
not emotionally scared or scarred. There's no right times. It's
just right now, right, So just do something. Just do
it as soon as you can, because these prices are

(47:02):
just going to keep going up. Mith number five, I
make too little. There are special programs designed just for you.
So as long as you have good credit, a job. Again,
remember my mother's story. She worked an hourly job, right
and she got prime rates. You'd be surprised I've often
found that the worst fears of the ones in your head,
like things are very rarely as bad as you think

(47:24):
they are. And what's gonna happen? Worst things that happens
when you tell you know you hadn't know when you
woke up this morning, you're starting with no, you can't
fall from the floor. Just try or I mean, just
try get in the game. So my hope coaches that
operation Ope will help you obtain a mortgage at prime
rates and get and back into being being qualified. Here's

(47:49):
the step, step by step guide and how to buy
a house even if you think you can't right now.
Step number one, know your credit score half a black
folks ever cord scored below six twenty the bank. It
may not be a bank discriminated against you or somebody
doesn't like you. It could be just credit your credit score,
your credit store stinks, Latino's a little bit above that.
And you know you can be white with a five

(48:11):
hundred credit score. By the way, the fact the biggest
population of poverty this country is poor white, so every
is not discriminating this. Everybody's got problems, but you can
fix those problems because rainbows only follow storms. So know
your credit score. I checked mine once a week on
my app, pull it for free. Understand what's holding it down? Okay,
and I'm gonna I'll do a separate podcast just on

(48:33):
credit score. But basically the number one way you move
that credit score is consumer managing your consumer credit debt
debt ratios. Ask the coach and Operation Hope when you
call them about these where John Brian said, you know
consumer credit, credit cards, debt ratios, Like, what do I do?
What does that mean? You want to keep your balances,
by the way, about thirty percent if you can? When Yeah, okay,

(48:55):
I'm gonna get into credit at the moment, I'm trying
to get through the mortgage thing. You want to seven
underd credit score ideally that's your target, right, And you
can check your credit on the Hope Financial Wellness Index online.
Go to the search for the Hope Financial Wellness Index.
Type in your credit score. Type in your zip code
will tell you your credit score. I want to take

(49:16):
experience forgiving us the data along with the US government
who helped us so to map a rezip code in
America by credit score number two budget and say for
your down payment right, so three to five percent minimum.
Realistically ten percent to twenty percent would be fantastic. But

(49:37):
just do something, just get it, just start saving, and
then let's figure out what's working with the coach where
there's some programs that can help you, right, tax refunds,
side hustles and help like the earn Income tax credit
that might be as much as twenty thousand dollars to
help you with your down payment, as my coaches about that.
And cut your subscriptions. All these things you subscribe to

(49:57):
and you forget you subscribe to it on your phone.
You'd be amazed how much money you can say. But that,
and stop smoking cigarette and stuff's gonna kill you anyway.
There's a way to save some money or whatever else
you're smoking, and what else, And don't go to a
coffee shop for a while, buy a curate machine and
make your coffee at home. Two ways to make money,

(50:18):
make more, spend less, right, so my people can get
you on a budget. Number three, get pre approved. It
is really important, Like get pre approved. It'll boost your
confidence just to get a bank to give you a
pre approval letter, not just prequalified, pre approved. Know you're
buying power. How much home can you afford to purchase

(50:39):
and then you walk into an open house with them
knowing that you got the power to say yes. I mean,
that's really powerful negotiating to it. When you tell your
realtor you already have a not a prequalification letter, a
pre approval letter. I just had a family member get
that wrong recently, and they had a pre qualification letter
and did not convert into a preapproval letter and they're

(51:00):
halfway through a transaction and now are having to figure
out how to restructure it avoid mortgage scams. Right, that's huge.
There's a lot of people trying to separate you from
your wallet. Number four. Work with the right real estate agent,
someone who advocates for you, not the seller. In my
operational people can help you find the right person. Number five.

(51:21):
Understand closing process, inspection, appraisal, underwriting, title, insurance, insurance, all
the house maintenance is something you're going to deal with next.
But these are the things that you want to make
sure you get through all these steps and don't shortcut it.

(51:44):
You'll end up paying the price for that later if
you shortcut. And if you deal with the bank, they're
going to make you do this stuff anyway, which is
good and you might want to consider having them bake
your property tax payments into your mortgage payment. At least
look at what that does to your mortgage payment. Don't
ask what you never asked what the mortgage payment is.
When there's an interest rate attached, we gotta stop being paymentized.

(52:05):
What's the payment? What's the payment? Was the payment? It's
even bad to do that. When you're buying a car.
You want to know what's the interest rate? Was the
terms and all that kind of stuff, And you don't
want an adjustable rate mortgage. In my opinion, you want
to fix rate mortgage. You want to know what your
payment is every month. Right, don't panic Your team will
you know? My team will guide you this whole process. Right.

(52:26):
Number six, celebrate and plan for what's next. Move with purpose, maintenance,
equity tracking long have a long term plan, and you
can become a multi millionaire in real estate, starting with
your own home. Use that equity as a powerful benchmark
to invest on a home, invest in your kids' education,

(52:47):
use the equity to do a home equity, allowing the
credit to buy it another home. Getting ahead of ourselves.
So here's a resources most people don't know about when
trying to become a homeowner, FHA loans for first time
low income buyers, City and county down payment assistance grants
all right, CR down payment assistance grants at banks, Community

(53:08):
Reinvestment Act. Can asked my coaches about all this stuff.
Cr A loan programs, Community Reinvestment Act loan programs at banks,
and also at credit unions. Credit unions are a great
source of capital. You may not know that, and you
may not realize you may qualify to become a member
of you of a credit union in your neighborhood. There
are low rates and low closing costs. These low these

(53:28):
CR loan programs and credit unions. I've got credit Uni
accounts for different things. I've actually bought up some cars
to credit unions. The incredibly they had the best rates
by far. HUT Housing UH counselors. We have HUD approved
financial counselors at Opera Show. But you want to make
sure that somebody's HUD as in US Housing Urban Development Department,

(53:51):
HUT approved, not the Homeboy Shopping Network. So housing counselors
for budgeting, planning, Opera Show, homeownership coaches, it's national and
it's free support. These are resources available to you that
I would recommend homewership. Home Ownership is dignity, it's power,
and it's yours to claim right now. So I want

(54:14):
you to have a call to action. I want you
to have a schedule to become a homeowner, a target date,
and work backwards. Don't say one day, say day one.
Start the journey today. Don't let the perfect become the
death of the good. I want you to share this
episode with others. I want you to pack. Go to

(54:36):
Opera Shope, download the app and sign up with a
whole financial coach. Tell them I send you. They'll give
you a thousand dollars coaching scholarship package to start with,
so none of our coaching will cost you any money.
You get serious about this, or upgrade you to the
next level of US coaching scholarship, which I think is
valued at five thousand dollars. Again, you to invest your
time and energy. Are payoff is seeing you successful. They're

(54:58):
going to help you get your credit score up fifty
four points in six months, your debt down thirty eight
hundred bucks with somebody making forty eight two two thousand dollars,
your savings up twelve hundred dollars so the bank can
get out of the no business and back into the
yes business. At scale. Right, we're in half of Truest branches.
We're in Wells Fargo branches. We're in US Bank branches,

(55:20):
and Nova's Bank branches, Regions Bank, First, Horizon Bank branches,
Santander Bank's I'm starting. I think I mentioned that I
mentioned Bank of America. We have child's accounts with City Group.
We're supported by JP Morgan Chase in other ways. I mean,
it's just so we're easier to tell you what banks

(55:43):
we're not in than to tell you what banks we
are in, because we're because if it's a well known bank,
it's a very bemoharas all these folks, it's a very
good chance that we're uh, they're partners. So go to
our opertional website or go online to the open hand app.
Tell all I sent you. It's John O'Briant. This is
money and wealth, and this is the first door to

(56:04):
you building wealth. It's home ownership. And tell these people
that tell you not to own a home that they're stupid.
Not that they're stupid, but they're saying stupid stuff. And
you tell them I said it people again. Next time
you hear a wealthy person telling you you shouldn't buy
a house, look at them in the face and say,
don't you own a house? Watch their face just drop

(56:27):
all right, Love you, Tell your friends and subscribe to
this podcast. I'll see you here this time next week.
Get my book Financial Legency. For all I've already said,
go to Operation Hope, Love and Light. This is a
civil rights movement. The civil rights from civil rights in
the streets to silvil rights in the suites. I'me out

(57:00):
Money and Wealth with John O'Brien is a production of
the Black Effect Podcast Network. For more podcasts from the
Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts,
or wherever you listen to your favorite shows.