← Money And Wealth With John Hope Bryant
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iHeartRadio Announcer
This is an iHeart podcast.
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State Farm Insurance Announcer
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John Hope Bryant
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Ryan Seacrest
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John Hope Bryant
Brought to you by Progressive Insurance do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy. Just drop in some details about yourself and see if you're eligible to save money when you bundle your home and auto policies. The process only takes minutes and it could mean hundreds more in your pocket. Visit progressive.com after this episode to see if you could save Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states. Welcome to Money and Wealth with John Hope Bryant, a production of the Black Effect podcast network and iHeartRadio. Hey hey. This is John Hope Bryant and this is the Money and Wealth podcast and we're going to break some serious myths today. 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 is More than not settled, how do you build wealth in America? What's the number one way made 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, 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 and how you can start right now. More so I'm going to get into why you should start right now and what are the steps to starting right now? We're going to get into this in a very deep way. I'm going to break this down because everybody tells you to get rich 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 are wrong and worse, some people are actually lying to you. I have not quite figured out why they're lying to you. Although greed's probably one of the motivations to turn everybody into renters. That's another topic for another time. One could argue that somebody has a plan that within five years or so that 60% 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 renting a night out, an 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 portfolios of rental home ownership or rental property, single family rental properties by a person of color in the country. Sold the company about three years ago. Embedded a lot of financial literacy and a rent to own program, by the way, into the model. But that's an aside. So I'm a landlord, why would I want you to rent? I'm about to do another business venture in real estate around a multi family. Why wouldn't 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, fast food restaurant. But that doesn't mean unless you just love that industry, you should stay there forever. Here's what I 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 here's what I 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 not to own a home, do a little research and you'll find that every one of 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, struggling people and poor people, and even middle class people that they shouldn't own a home. Well, Those people, overwhelmingly 99.9% 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, but I'm going to deal with America here first. And then you can extrapolate this data to other developed countries, because a lot of this data is similar. Median net worth of renters in America, $6,300. Median net worth of a homeowner in America. Hold on to your boots. $255,000. Homeownership gap. 44% of blacks Americans. African Americans own a home, give or take, compared to 72 to 75% of their white counterparts. And this is not because people who are of a different hue take a different intellectual cue. As my friend Michael Milken would say, intelligence 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 or not captured in homeownership. Here's a hard truth, a very simple one. The number one way you build wealth in America is homeownership. Period. Full stop. There are three things that have never gone down in American history. Homeownership values, stock market values, American gdp, gross domestic product, the income of the economic activity of the nation. GDP is about $30 trillion today, probably about a fourth of global GDP of all GDP. You can put the top two or three economies inside of a bucket and put that bucket inside of the American economy. What's the engine of the American economy? As I already told you, stock market. Yes, it busted in the Great Depression, but it came roaring back. Homeownership has had several bursts, including the 2008 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 crises before that, but real estate kept, homeownership in particular kept roaring back. So stock real estate will go up in value. Nothing is guaranteed. It'll hit some wall. There will be a recession, it recedes. That's what recession, recession recedes. That's what that means in layman terms. It recedes. It, it pulls back as an industry, as a sector, in this particular case, as relates to value. But then at some point it corrects and resets above the line. I'll repeat that. The country real estate, homeownership. Think about the Texas real estate that you could almost give away 25 years ago, 20 years ago, something 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, Las Vegas, where people like it's over, it's done. Miami, they came roaring back, oftentimes eclipsing former valuations of that same house. They go up in value, they recede. 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 think it might resonate with you. I'm going to tell you the most recent story first and then go backwards. So not the 700 homes that I own through a company I sold, the Promise Homes company. I'm still a shareholder, but I'm like a limited partner. Somebody else owns it and runs it in the last three and a half years. But I built that company from zero to about $150 million of market value. Before that I had one house and before that I had a small condo townhouse. I also owned a three 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 that condo townhouse, 2006. Ish. I believe that's the date. The date ranges. But around that time, right before the economic crisis, I paid about $220,000 for it, as I recall, is about 1500 square feet. 7122 Latijara Boulevard. You can look it up. It's worth over a million dollars today, I'm told. But anyway, I bought it for $220,000. It was 1500 square feet and I lived there. And the recession hit, the economic Crisis hit in 2008, the mortgage crisis and all of my friends. Let me insert my broke friends. They meant well, but 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 rationalize is to tell rational lies. So my broke friends were saying, sell, sell, sell. Prices 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, I got to live somewhere, why would I sell the place 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 appraised value. The appraised value had dropped into the ones I think it was about 160 or so. 160, 170, 180. I bought it for 220. I ignored it, 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 of most things around me because it just doesn't matter. I am encouraged about 2009 by my mentor, Ambassador Andrew Young, and one of his friends, Sam Bacoat, to move to Atlanta. For a range of reasons, I decided to take them up on their offer because Ambassador Young was my absolute hero, still is to this day, my role model. And he sort of took over the role from Reverend Dr. Cecil Tripp Murray in Los Angeles 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, 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 small, out of my pocket for me, forgot about it. So 2009 goes by, 2010 goes by, 2011 goes by, 2012 goes by. I have to chase a guy every now and then for rent, but he always pays eventually. I always pay my mortgage credit. Credit score is great. Minor changes. You know, there's a faucet that goes bad or a toilet that needs unplugging, you know, unclogging or Something. But keep in mind, by the way, no one washes rental cars. So when you own a house or own a property, you're going to be stuck with the maintenance bill. But that's fine. You also get all the benefits of homeownership, which I'm going to 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. 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 long term. So I just kept it. So now it's 2013, 2014, 2015 and 2016. And around this time, me and the family decided we wanted to switch up from the house I was staying in in Atlanta. I bought a house in Atlanta and wanted to buy a family home. 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 bones of it was solid, but it needed a lot of help. And we bought the house. Well, we wanted to buy the house, but it was $750,000 in 2016. Ish. Trying to figure out how to, you know, buy this house. I wanted to keep the home I was staying in at that point in Atlanta. So I called a broker in my mortgage broker, African American man Daniel Lowe, who at some point I'll have on this podcast, I call him. Hey, Daniel, what do you think I can sell that condo townhouse for in Los Angeles? Mind you, I bought it for 220. Last time I checked, the value was 160, 180 ish. My friends had told me to sell it. He says, oh, I can probably get you about $750,000. 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 just hear through an echo? Did you, did you, did you say $150,000, $750,000? I said, how quickly can you sell this property? He said, I can probably get it sold in a month. Excuse me. Yeah, the market is hot for this kind of property. And he's got a great location at latijera near the 405 Freeway, which was near economic activity. That's where I always tell you, near transportation, near economic activity, etc. 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 a 1031 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 whatsoever. Zero. This again, this is the magic of real estate. So I made a capital gain of at least $500,000, which was a huge surprise. And I didn't have to have to pay a dime of taxes on that $500,000 net proceeds. Well, yeah, after I paid the mortgage down because I, I shifted that into buying a new property this particular time in Georgia. I then take out a mortgage with a construction loan, a 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 multi million dollar fine right now. I'm not a genius in that example. I didn't pick up and move the property in LA to another location. I didn't rehab it 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 sink when it ever got clogged. And my upside was a return that, a legal return that rivals 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.
- [20:46]
State Farm Insurance Announcer
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- [21:41]
Ryan Seacrest
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John Hope Bryant
Hey, Ryan Reynolds here for Mint Mobile. Now I don't know if you've heard, but Mint's Premium Wireless is 15amonth. But I'd like to offer one other perk. We have no stores. That means no small talk. Crazy weather we're having. No, it's not. It's just weather. It is an introvert's dream. Give it a try@mintmobile.com switch upfront came.
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Ryan Seacrest
In a $45 for a 3 month.
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John Hope Bryant
Plan, $15 per month equivalent required.
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New customer offer first 3 months only.
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John Hope Bryant
Then full price plan options available, taxes and fees extra.
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John Hope Bryant
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 the condo townhouse for $220,000. Let's just say I put 20% cash down. I'm sure I get put 10% but let's just say it was 40%. That's a maximum 40%. 5 ish thousand dollars probably was more like 20 $25,000. And that down payment, along with me paying occasionally some maintenance work over the next eight years or so facilitated a sale for $750,000, most of which was net to me in profit. Think about that 20 to $40,000 translating into 12x that in profit with no tax bill that I didn't rolled into another property, took out again another loan which was tax beneficial. Explain that again in a minute where 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 home is a bad personal investment. Let's back up now. My mom and dad fought over money. Juanita Smith Johnny Will Smith. Wonderful human beings, incredible role models in Many way. But my dad was financially illiterate and wouldn't listen to my mother, unfortunately, who was a great investor. Together they would have been excellent if one made the money and one invested the money. One used their income to investment. 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 frustrations with each other. We owned a gas station at Vernon in western southeast corner, still there to this day. We owned an eight unit apartment building on Santa Barbara Boulevard, now called Martin Luther King Boulevard. We owned our own home on that same street. We owned a nursery business, a cement contracting business. The apartment building we bought for $18,000, give or take an eight unit apartment building. We would live in one unit and the rest was profit. We bought this unit for $18,000 in Los Angeles. Last time I checked, it was worth $8 million. We lost it all. 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 businesswoman, is paperwork. My dad did not want to do and bother with paperwork. Financially illiterate, they argue, they fought. Domestic abuse. Number one cost from divorce is money. Number one cost. Domestic abuse is money. They fight. They go their separate ways. My mother, California is a community property state. She could have taken him for everything he had, particularly she had the kids with her. What a decent, amazing woman. She just left with literally clothes on 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 $4,000 my mother saved and went 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, Donnie, Dave Darnell Harris, Donnie had to go into the military in order to 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. Tell you the power of financial literacy. He has a home, he has the eight unit apartment building, he has the gas station. Then he's got these other businesses in the cement contracting business. So. Hold that. Okay, park that for a minute. My mother has nothing Works an hourly job at McDonald, does aircraft and Boeing aircraft. So having the real estate is not enough. You need financial literacy, you need paperwork. You need to understand how this system works. You need to understand how the tax system works. The entire tax system in America is designed to support home ownership. Hello, mortgages. When you buy, get a 30 year mortgage on a home. 20 of those. 30 years on average. 20 years of that 30 year 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 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 the value of appreciation. I've already described that. That's when the value goes. Property goes up in value and you pay no taxes on that. But check with your tax pro. If you do a 1031 tax free exchange, if you're married and you file tax returns together is as much less than my check as a half a million dollars in free equity when you 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 W2 income, which is, which is around your payroll. Okay, Capital gains is what it sounds like. Capital gains one, you can do capital gains on stock. Okay? Capital gains on a business, when you sell it. Capital gains on stock, we sell it. Capital gains on home, when you sell it. Okay? So my mother goes to live with her girlfriend, tells me, it's my auntie, by the way. I go and this, you know, make the long story short, we had some trauma drama. As I was staying with him, I fall on the porch, was swallowing my tongue, almost choked to death. And this guy O.C. who we lived with, who had a. I don't know if he owned the house, rented it, but he took care of the house with his girlfriend, who was my mother's friend. And he should have sat down with my mother and said, look, I can't afford to take care of your family and mine. Can we 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. So OC Decides to just go, you know, he's got a full time job, but he decides to go around the corner sell marijuana anyway. I saw him murdered in Front of me by the drug dealers for whom this was his real territory. I'm getting doing the story really quickly because this is not about my story. This is about owning a 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 boy. They were 6ish. And my mother buys a house in our first home at 15502 South Fraley. Essentially when you buy a house, you remember the address. She buys our first home in 15502 South Fraley without anybody's help. Got a credit score up, right. And got a job and had saved a down payment. She buys this house, modest house, but beautiful in Compton, California. And when I tell you my dad was balling now. So now let's fast forward at the end of the day. My mother buys and sells seven homes. Helped my sister buy a house twice with the down payment. Helped my brother to buy a house with the down payment. She's working an hourly job now. She has a credit score of over 850. Back when it gets went over more than 850, it gets capped out at 850. 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 $1 million. Working an hourly job, 15 to $18 an hour for 32 years. And McDonnell Douglas aircraft, now known as Boeing Aircraft. Okay, my dad lost everything, everything I told you about the house. The eight unit apartment building now worth millions and millions of dollars. The liquor store, not the liquor store, the gas station. Lost it all. 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 reverse pimping. He was the first. He was sort of, I believe, 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 this lady. She accepted the offer. It was a hundred some odd thousand dollars or something. I bought the house he was staying in. I knocked down three walls. Remember I told you there was a three unit apartment building that I also sold in LA. I walked, I knocked down three walls, left one wall up. Getting financial literacy, if you leave one wall up, it's not new construction, it's left one wall up. It was zone R3. My dad thought it was R4, meaning four units. It was R3, three units. It was a single family home on a lot zoned R3, 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 blow. Run that into the ground so badly, Mismanaged it so badly. I had to go get a refinance of the construction loan. Thank God the market at that point was going up. I'd have been killed financially. I would have had to file bankruptcy. I went back to Wells Fargo. Thank you so much, Tom Swanson, for having empathy and grace in your heart. He refinanced that dang on construction loan and got me more proceeds to finish that building. And that's why I always tell you, never make emotional decisions and don't do crap with family other than give him a hug and some love and money you can afford to lose. I put this loan in the hands of my dad. I knew he was financially illiterate, even though he's a great hustler and he fulfilled his promise of messing it up. I love my dad. Love, love, love, love, love. My God rest his soul, but boy, did he screw this up and stress me out. And so again, I, I, and I didn't give him, I didn't give him that credit card again. I had to pay. It was a $6,000 MX card American Express balance that he ran up in a month and I had to pay that off. And that was when six 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 up quite as value. I wasn't as much, it didn't, didn't go up as, as rapidly because I had all that debt on it because I had to refinance construction loan twice. My dad lived in one unit. I took rent from the other two units that paid the mortgage. And so he was able to live in dignity and rent free as he got older. And think about all the people going to have parents getting older. You need to be thinking about what I just told you. So anyway, I cleared the deck on the two Properties I had in, in, in LA is the third one, but that's another story. To that I cleared the deck of those two products, 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 situation when nobody kicks you out of your house. They don't have the power to do that. I remember a brother, I was giving a speech somewhere and brother's like, ah, John, sorry, talking about home ownership. I don't own the house. The bank owns the house. House. If you don't pay, right, it's crazy. Like as long as you pay the mortgage on time, the house is yours, right? And yeah, there's a loan on it, but there's no billionaire, no multimillionaire, no Dowsinger, 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. There are tax benefits to owning a home mortgage, interest deductions, capital gains exclusion. I've discovered, I've, 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 are the number one 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 got somebody in mind who says stupid stuff like this. He lives in Miami, he's very popular, but I don't want to name his name. I'm not trying to demonize him or whatever, but he just gives bad advice, talking about, you know, he would never put money in a home, he'd only put money in the business. Well, he's also worth $40 million. I mean, so it's just crazy. But the average family, right? Do you want to rent someplace or do you want to own where you live? It's just so common sense to me, right? And when is a good time to buy a house when you can afford it? 1%, 2%, 3% 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 make it, make rates artificially low. But rates were increased from again, free money 1 to 3%, which again I think which is an aberration it happened during the mortgage crisis, by the way, to a very reasonable 5, 6%. That's still very reasonable. I mean, when my dad was on the scene, my mother was on the scene. I remember mortgages being in the teens, like 15, 16%. 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 go up in value. Real estate is just going to keep going up. Like, don't. 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 40 acres and a mule. That. We know that story. But it was only 18,000 families, Black Union soldiers, who got the benefit of 40 acres and a mule. And that benefit was actually 400,000 acres divided by 18,000 families as a pilot by Abraham Lincoln, Secretary of War Stan, and General Sherman. After the Civil War, unfortunately, Lincoln was assassinated and the people who took him out took over reversed field action 15, which was 40 acres in a mule. I don't know if you know that. It was reversed. So people are talking about black people are lazy and all this kind of. It's 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 1800s, the last place you wanted land was 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. 40 acres and a mule. The bank came the next month, the Freedmen's bank, which I have the honor of being 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 Annex building for 100 years. It's now called the Freedmen's Bank Building next door to my friends, Michael Milken's Milken 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, McAd. You should go see it and go visit the Freedmen's bank next door, which was the location that Frederick Douglass sat in, where he ran the bank chartered to teach free slaves about money, financial literacy, circa 1865. So January was the land, February was a mule, March was the bank. In April, unfortunately, Lincoln was assassinated, and the whole dream he had for emancipating educating, and empowering formerly enslaved people fell apart. And by 1874, that bank had failed because white board members of that bank, chartered to serve endowments on the savings of blacks, by the way, had changed the charter of the bank so that they could borrow money. And guess who they loaned the money to? Themselves. Okay, never mind with a history lesson. But that was what. That's what happened to the only time the blacks had a chance to get some land after the slavery. After slavery, it was only 400,000 acres. You might think there's a lot of money. We're about to tell you about 270 million acres in a second. So that's that experiment. So 1862. Ish. Here comes another act that it was created to give those who are moving west an opportunity to buy land. And that act transferred. The Homestead act of 1862 transferred over, let's say, a decade at. By the way, it was 40 acres for black people. This was about 160 acres each plot. And it transferred 270 million acres. Not 400,000 acres, 270 million acres to struggling but enterprising families wanting to go west. 99.9% of those plots were given 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, Ha ha ha, in places where you could grow crops of that day. It's certainly much better than the beachfront property he was given to blacks that, by the way, if I didn't mention, was taken back away from them two years later after Lincoln was assassinated. It was literally the new president, President Johnson reversed, Effectively, field action 15 and reconstruction, and all that land was given back to the Confederate families that owned it beforehand. Can you imagine the indignity of this? It gets worse, though. I'm just trying to explain to you the history so you can get that out of your system. We can move on. If you happen to be a person of color, we're just putting your bucket down right now. And no more excuses. I'm trying to explain to people who have privilege why you are more than just smart and those who don't have privilege, why you shouldn't be just irritated, you should be. Well, success is great. 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 homeownership. But let's be honest about what happened. So the. The Homestead Act May 20, 1862. A lot of people go, go west and you got 160 acres. You had to live on the land for five years. You had to build a dwelling, cultivate the land. And 270 million acres, that's 10% 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 100 million Americans, mostly white, benefit today from Homestead act land. Fast forward now to the government having their turn at screwing over people of color. That was the FHA, the early 20th century, where they created redlining. It wasn't banks that created redlining, it was the federal government. They literally said, we are not going to guarantee you a mortgage loan in these neighborhoods. They're dangerous. Well, guess why they're dangerous? Because the Freedmen's bank was upended and no one taught 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. By the way, poor whites did the same thing. He had more poor whites American than poor anybody else. That's a different podcast for a different day. So the government blamed poverty on the poor and told people to bootstrap themselves without shoelaces and refused to insure a mortgage in a. In a so called poor black neighborhood. But guess where they insured the mortgages In a white suburban neighborhood or a suburban neighborhood that happened to be white. Well, guess where the banks wanted to write a mortgage in places where they were insured insurance from the federal government. So it actually wasn't banks that were doing discrimination at that point, it was the federal government. And where did banks not want to write a mortgage in a place that was perceived to be dangerous, where there was no mortgage insurance. And that's why you'll see properties 15 minutes apart today to this very day that are literally hundreds of thousand dollars in difference or more in value. You'll have a underserved area where houses 40,000, $100,000 in value, and 15 minutes away, you have an area where the home is worth three quarters of a million, a million, $2 million. And this was the root 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 II and something like 92% of all GI Bill allocations went to Caucasians. So GI Bill was as much education shoved down your throat, skill 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 modern middle class, so voila. So they say. 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, do it, we're telling you, get your savings up, whether you're black or white or red or blue. Politics, whether you're urban or rural, it doesn't matter. Operation Hope can help you produce some green in your life, can help you get access to capital from one of the biggest, most prestigious banks at prime rates today, and get you in the seat to own your own home. In fact, a third of those that we serve today, well, I think it's maybe 4, 25% of those we serve today are in rural America. By the way, 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 serving 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 $4.5 billion in prime capital, half of which is. Half of that is for mortgages. In fact, Fulton bank, one of our Partners, has done $1.2 billion in homeownership for black Americans alone, just in the Pennsylvania. I'm sorry, in the Pennsylvania area. And then we're doing stuff with Wells Fargo and Bank of America and our Hope Inside Locations and Truist bank, where we're seeing real results in getting people access to capital. We're raising credit scores 54 points in six months, lowering debt $3,800, increasing savings $1,200. Somebody making 48,000 to $50,000 a year, giving them a real shot at home ownership.
- [48:50]
State Farm Insurance Announcer
You've been working in the garage with your dad every week, Monday to Sunday, trying to get the old school up and running. Today, after all the hard work, y' all finally finished it. So you have that feeling of accomplishment. You did it. Then your dad throws you the keys. He says those three magic words. All yours, son. Yep. Same car that belonged to your grandpa and that your dad helped him fix. It's yours. Three generations, right there, keeping the tradition alive. But if you ask dad to really keep the tradition going, you need to get insurance. And you already know you need to get State Farm because your agent, well, he gets tradition too. His dad was an agent, his grandpa too, so he gets you generation to generation. Remember to choose the agents that your family counted on. Like a good neighbor, State Farm is there.
- [49:44]
Ryan Seacrest
Hey, it's Ryan Seacrest for Albertsons and Safeway. Spooky season is quickly approaching, so time to stock up on all your favorite treats now through October 7th. You can get early savings on your Halloween candy favorites when you shop in store and online. Save on items like Hershey's, Reese's Pumpkins, Snickers Miniatures, Tootsie Rolls, Raw Sugar, Milk Chocolate, Caramel, Jack O Lanterns, Brock's Candy Corn Charms, Mini Pops, and more. Offer ends October 7th. Restrictions apply. Offers may vary. Visit albertsons or safeway.com for more details.
- [50:14]
iHeartRadio Announcer
Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, iheart's twice as large as the the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart streaming radio and podcasting. Let us show you@iheartadvertising.com that's iheartadvertising.com hi.
- [50:45]
John Hope Bryant
There, this is Josh Clark from the.
- [50:47]
State Farm Insurance Announcer
Stuff youf Should Know podcast.
- [50:48]
John Hope Bryant
If you've been thinking, man alive, I could go for some good true crime.
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State Farm Insurance Announcer
Podcast episodes, then have we got good.
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John Hope Bryant
News for you, You, Stuff youf Should Know just released a playlist of 12 of our best true crime episodes of all time. There's a shootout in broad daylight, people using axes in really terrible ways, disappearances, legendary heists, the whole nine yards. So check out the Stuff youf Should Know true crime Playlist on the iHeartRadio.
- [51:11]
State Farm Insurance Announcer
App, Apple Podcasts, or wherever you get your podcasts.
- [51:20]
John Hope Bryant
So not about feeling sorry. It's about catching up with a plan. Right? This is a plan for you. So let's now bust up some big myths about homeownership. You need 20% down. Not true. It's nice to get 20% down. But there are many, many programs from FHA. Oddly enough, the same organization that discriminated against blacks in the early 20th century. FHA. You can get 3.5% down. Payment assistance. You know, it's 3.5% mortgage rate. Sorry, in down payment assistance available programs available. Through them, you can go to a FDIC insured bank and talk to them about the community reinvestment act programs and in some cases, get a grant from them for $10,000 to help you with a down payment. Did you know that? Yes. Operational coaches can help you with that. Go on your Hope and Hand app on your phone or call a 800 number or go to our website, operationhope.org and one of my team members across 42 states will help you help yourself. At what fee? Zero. It's all scholarship for you because we raise the money on your behalf. Okay, here's a myth number two. My credit isn't good enough. You may qualify between 580 and 620 through one of these government programs. If you're trying to get a market rate prime bank loan, we're going to do your credit score up to close to 700. But Operation Hope is doing that. In fact, if you want to be, to be patient, wait 24 months, we'll get your credit score up 120 points in 18 to 24 months. We'll get it up 54 points in six months on average. So, you know, in a world where you think that your lot of things are not in your control, this thing, your credit score, we can, we can move it with your help, considerably, along with getting your debt ratios down. Get your ratios right. So 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. 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 time to buy is when you are financially ready to do so. Not emotionally scared or scarred. There's no right time. It's just. It's just. It's just right now, right? So just do something. Just, just, just do it as soon as you can, because the prices are just going to keep going up. Myth number five. I make too little. There are special programs designed just for you. So as long as you have good credit and 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 fear is the one that's in your head. Like things are very rarely as bad as you think they are. And what's going to happen worst thing that happens when they tell you no, you had no. When you woke up this morning, you started with no, you can't fall from the floor. Just try. I mean just try. Get in the game. So my Hope coaches that operational will help you obtain a mortgage at prime rates and get back into being bank qualified. Here's the steps, step by step guide on how to buy a house if you think you can't right now. Step number one, know your credit score. Half of black folks have a course score below 620. So maybe the bank, it may not be a bank discriminated against you or somebody doesn't like you. It could be your credit, your credit score, your credit score stinks. Latinos a little bit above that. And you know you can be white with a 500 credit score by the way. In fact the biggest population of poverty in this country is poor white. So every this is not discriminating. Everybody's got problems, but you can fix those problems because rainbows only follow storms. So know your credit score. I check 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 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 at Operation Hope and you call them about these that John Gryan 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 at about 30% if you can. Okay, I'm not going to get into credit at the moment. I'm trying to get through the mortgage thing. You want a 700 credit score, ideally that's your target, right? And you can check your credit on the Hope Financial Wellness index online. Going to go to the search for the Hope Financial Wellness Index. Type in your credit score, type in your zip code, we'll tell you your credit score. I want to thank Experian for giving us the data along with the US government who helped us to map every zip code in America by credit score. Number two, budget and save for your down payment. Right. So 3 to 5% minimum. Realistically 10% to 20% would be fantastic, but just do something, just get it, just start saving and then let's figure out working with the coach where there's some programs that can help you, right? Tax refunds, side hustles and help like the earned income tax credit. That might be as much as $20,000 to help you with your down payment. Ask my coaches about that. And cut your subscriptions. All these things you, you subscribe to and you forget you subscribe to it on your phone. You'd be amazed how much money you can save with that. And stop smoking cigarettes. Stuff's going to kill you anyway. There's a way to save some money or whatever else you're smoking. And what else? Oh, and don't go to a coffee shop for a while. Buy a Keurig machine and make your coffee at home. Two ways to make money, make more, spend less. Right? So my people can get you on a budget. Number three, get pre approved. This 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 pre qualified, pre approved. Know your buying power. How much home can you afford to purchase? And then you walk into an open house with knowing that you got the power to say yes. I mean that's really powerful negotiating tool. When you tell your realtor you already have not a pre qualification letter or 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 pre approval letter. And they're halfway through a transaction and now I have 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, understand closing process, inspection, appraisal, underwriting, title insurance, insurance on the house, maintenance is something you're going to deal with next. But these are the real things. You want to make sure you get through all these steps and don't shortcut it. You'll end up paying the price for that later if you shortcut. And if you're dealing with a 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 the. You never ask what the mortgage payment is when there's an interest rate attached. We got to stop being paymentized. What's the payment? What's the payment? What's the payment? It's Even better to do that when you're buying a car. You want to know what's the interest rate, what's the terms and all that kind of stuff. And you don't want an adjustable rate mortgage in my opinion. You want a fixed 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. 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 multimillionaire in real estate starting with your own home. Use net equity as a powerful benchmark to invest on a home. Invest in your kids education. Use the equity through a home equity line of credit to buy another home. Getting ahead of ourselves. So so here's a resource that most people don't know about when trying to become a homeowner. FHA loans for first time or low income buyers. City and county down payment assistance grants. All right. CRA Down Payment assistance grants at banks. Community Reinvestment Act. You can ask my coaches about all this stuff. CRA loan programs, Community Reinvestment act loan programs at banks and also at credit unions. Credit unions are great source of capital. You may not know that and you may not realize you may qualify to become a member of a credit union in your neighborhood. There are low rates and low closing costs. These low. These CRA loan programs and credit unions. I've got credit union accounts for different things. I actually bought some cars through credit unions. They had the best rates by far. HUD housing counselors. We have HUD approved financial counselors at operational but you want to make sure that somebody's HUD as in US Housing Urban Development Department HUD approved. Not the Homeboy Shopping Network. So HUD housing counselors for budgeting, planning, operational homeownership coaches. It's national and it's free support. These are resources available to you that I would recommend. Home ownership is dignity. It's power. And it's yours to claim right now. So I want you to have a call to action. I want you 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 go to Operation Hope, download the app and sign up with a whole financial coach. Tell them I sent you. They'll give you a thousand dollar coaching scholarship package to start with. So none of our coaching will cost you any money. You get serious about this, I'll upgrade you to the next level of a coaching scholarship, which I think is valued at $5,000. Again, you have to invest your time and energy. Our payoff is seeing you successful. And we're going to help you get your credit score up 54 points in six months, your debt down 3,800 bucks with somebody making 48, $50,000 your savings up $1,200. So the bank can get out of the no business and back into the yes business. At scale. Right, we're in half of truist branches, we're in Wells Fargo branches, we're in US bank branches, Synovus bank branches, Regions Bank, First Horizon bank branches, Santander Bank. She's. Well, I'm starting. I think I mentioned that. I mentioned bank of America. We have child's accounts with Citigroup. We're supported by JPMorgan Chase in other ways. I mean, it's just so. It's easier to tell you what banks 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. Be more Harris or all these folks, there's a very good chance that we're their partners. So go to our operational website or go online to the Open Hand app. Tell them I sent you. It's John o'. Brien. This is money and wealth and this is the first door to you. Building wealth is homeownership. And tell these, these people that tell you not to own a home. That they're stupid. No, that they're stupid. But they're saying stupid stuff and you tell them, I said it. People, 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. All right. Love you. Tell your friends. Subscribe to this podcast. I'll see you here this time next week. Get my book financial Literacy for all. I've already said. Go to Operation Hope, Love and Light. This is a civil rights movement. To civil rights. From civil rights in the streets to civil rights in the suites. I'm out. Foreign 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.
- [65:37]
Ryan Seacrest
Hey, it's Ryan Seacrest for Albertsons and Safeway. Spooky season is quickly approaching. So time to stock up on all your favorite treats now through October 7th. You can get early savings on your Halloween candy favorites when you shop in store and online. Save on items like Hershey's, Reese's Pumpkins, Snickers Miniatures, Tootsie Rolls, Raw Sugar, Milk Chocolate, Caramel, Jack o' Lanterns, Brock's Candy Corn Charms, Mini Pops, and more. Offer ends October 7th. Restrictions apply. Offers may vary. Visit albertsons or safeway.com for more details.
- [66:06]
John Hope Bryant
Chances are, you've been to the doctor recently, and you probably handed over your insurance, your ID, and even your Social Security number. Your doctor is just one of many places that has your personal info, and if any of them accidentally expose your dad details, you could be at risk for identity theft. LifeLock monitors millions of data points a second. If you become a victim, they'll fix it, guaranteed, or your money back. Save up to 40% your first year. Call 1-800-LIFELOCK and use promo code iheart or go to lifelock.com iheart for 40% off. Terms apply.
- [66:39]
iHeartRadio Announcer
This is the story of the one as head of maintenance at a concert hall, he knows the show must always go on. That's why he works behind the scenes, ensuring every light is working, the H Vac is humming, and his facility shines with Grainger's supplies and solutions for every challenge he faces. Plus 24. 7 customer support. His venue never misses a beat. Call clickgrainger.com or just stop by Grainger for the ones who get it done.
- [67:09]
John Hope Bryant
There's a million things to stress about when flying overweight luggage, TSA lines, delays, overpriced airport lunches. Your rental car shouldn't be one of them with Avis. First, your rental comes with a personal concierge who meets you at arrivals, hands you the keys to a premium car, and refills it for you at market price when you're done. You've rented before, but trust me when I say you've never rented quite like this. Welcome to Avis First. Visit Avis.com to learn more.
- [67:40]
iHeartRadio Announcer
This is an iHeart podcast.