Why immigrants have an unfair advantage for investing in real estate

America has effectively labeled itself as the land of opportunity. Seriously, of all the branding angles a country could go after, “land of opportunity” is a pretty stellar one. And it is with good reason.

We firmly believe that it is easier to start from the bottom and grow wealth in the United States than in any other country. It really is the place where hard work and determination are rewarded. We can all point to countless rags to riches stories. It doesn’t mean that the protagonist won’t meet adversity, but with consistency and diligence, they prosper in the end.

As children of Caribbean immigrants, we believe that it has helped us take advantage of American opportunity even more. We were raised with mindsets that allows us to view the world differently and be grateful for the safe, stable conditions we live in. This optimistic view gave us an unfair advantage in growing our real estate portfolios.

Here’s why:

We are primed to see opportunity

Have you ever heard someone say that there’s opportunity all around you, you just have to look? Come’on don’t roll your eyes…it’s the truth! If you look around, and we mean really look, you will see opportunity from every angle. It normally looks like a problem or something people complain about.

Because we happen to like real estate, one of the problems we hear is that bad neighborhoods are an eyesore. Or that it’s hard to find good quality housing close to the city that’s not super expensive. Of course, we have all heard landlord-tenant horror stories…from both sides.

Naturally we thought real estate investing must be a good idea! Look at all that opportunity to change perception and capitalize upon the negative connotations to acquire underpriced assets!

In real estate, everyone has heard, buy low and sell high. But few people actually know what that means in practice. In order to buy something “low” (read: less than it’s worth) there has to be a reason why you’re able to buy it low.

The only way you can buy real estate for less than it’s worth is if there is a problem with the property (in need of repairs or paperwork issue), there is a problem with the owner (they don’t have the money to maintain it) or both. Even in the Great Recession, the issue was not the overall economy; the problem was that homeowners did not have the money to maintain their mortgage payments.

Don’t get us wrong, the economy does play a role, particularly when it comes to selling but ultimately, in order for an asset to be underpriced, there is usually an underlying problem that needs to be solved.

Speaking of “sell high”, there has to be a reason why you are able to sell a property for more than its intrinsic value. All things being equal, we would not pay more than we perceive a meal to be worth at a restaurant, so why would we pay more than we perceive a property to be worth? The answer lies in economics. Supply and demand. When there are fewer properties available than willing buyers, the sellers have the upper hand. This is known as a seller’s market. If you are looking to get rid of a property, this is the time to do it.

We advocate holding on to property for the long term. We do realize that sometimes a property turns out to not be a good fit for your long term strategy so you may want to sell.

Resilience is a core belief

Like we said earlier, in most rags to riches stories, the protagonist meets some adversity. Likewise, so have we. It’s integral to the human experience, after all.

What separates those who win and those who do not win is resilience. Some people call it determination, others call it grit. It doesn’t really matter what you call that stick-to-it-ness, all that matters is that you do stick. to. it.

As first generation Americans, our parents had the idea that we are ultimately responsible for the life we live. Whatever your life is like, no one but you are to blame (or praise) for it’s existence. As  children, we used to think that our parents were mean and heartless when we would ask why we live in a big house but my cousins lived in an apartment. They would simply say, “that’s the life they chose.” Or something like “that’s all they worked to achieve.”

Ouch!

It’s true, barring extreme cases, here in the land of the free you are largely in control of the life you have. The first step is taking responsibility for everything that is in your life, good or bad. Funny enough, a lot of self awareness gurus say this is the first step to purposeful living. Luckily we had gurus as parents and didn’t even know it!  

Real estate investing requires the same tenacity to see a deal through. If you’ve ever tried to buy a house as a personal residence, you know first-hand how tedious it is to search for a property you like, only to realize that identifying the house is the first step in a long series. After the house is selected, you then have to negotiate a price and sort out financing.

The search for a lender who will underwrite the loan with favorable terms in a reasonable time frame begins. Meanwhile the inspection period begins, and if something undesirable is found in the report, back to the negotiation table you go! Assuming the inspection and underwriting go on smoothly, then comes the title work and so on. You soon realize that the deal isn’t done until the ink is on the page!

This process is only further complicated if you do not intend to occupy the property as an owner-occupant. Let’s just say that being from a culture that encourages tenacity has only helped us remain focused to follow through with the process of transacting real estate.

Let us not forget, as buy and hold investors, purchasing the property is only the first step! Typically the properties we purchase need some renovation. And keep in mind that as rental property, we have to find, screen, and select tenants, as well as manage the property and any repairs needed while it’s occupied. Having a resilient mindset is key.

Primitive business models make sense no matter where you’re from

Alright, it’s time to get down to brass-tax. We are Caribbean-American people. That means that our families come from remote sugar-producing nations in the middle of the Atlantic. Beautiful? Absolutely! Hot beds of innovation? Not so much. This means that we tend to value pragmatic investments that fundamentally make sense.

We are not the ones to jump on the next IPO (although we do dabble in swing trading)! We like to build sustainable, enduring businesses that don’t need to prove their worth in the marketplace. We don’t need to have millions of dollars to survey millennials to find out if they want to live in houses and apartments. People need housing. It’s one of the basic necessities: food, water, shelter. Market research complete.

One of the beautiful aspects about real estate is that it is a basic necessity. Housing isn’t going out of style. It doesn’t matter where you are in the world, as long as people live there, they will need housing. Sure the type of housing may change, but fundamentally, people need housing and we provide it. It’s simple to understand.

Engaging in a primitive business is an advantage because it forces you to be creative in other ways. We have to think of clever marketing and carefully select design elements to attract high quality tenants. While it does come with its own challenges, at the end of the day, we know that given the right price, someone will always rent the property. The peace of mind that comes with knowing that you provide something that people need makes us proud. The sense of pride in ownership is not matched by other asset classes – and certainly isn’t nearly as tax-favored.

Immigrants in real estate

Immigrants are part of what makes America the country that it is and the immigrant mindset certainly gave us an unfair advantage. CityLab reports that children of immigrants will be responsible for much of the US economic growth in the future and we are proud to be a part of it.

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