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The journey toward homeownership for any minority individual can be both challenging and terrifying, particularly when faced with concerns about state politics and discrimination. A recent Redfin survey indicated this is especially true right now for the LGBTQ+ community.
There is a great hesitation from members of the LGBTQ+ and other minority communities to becoming homebuyers and securing generational wealth. Between interest rates and local politics, many are sitting on the sidelines until they find the right place.
Waiting for the perfect time may seem tempting, but waiting for the right time often means it will never be the right time, for anything.
Here are the top five things that are on my radar when speaking with terrified renters living in red states where they feel unwelcome.
1. Seize the investment opportunity
Many LGBTQ+ buyers are unaware of the investment potential that homeownership provides and their ability to achieve it. We all grow up being told certain things, and within a minority community there is an overwhelming amount of negativity about success.
Adding to this challenge are those people who were kicked out of their homes at 16 years old because they came out of the closet or dropped out of school to help their single parent pay the bills. Even being raised in a moderate-to-low-income family unit with both parents, minority families have been steeped in poverty mentality for decades. We were told that financial success and generational wealth was impossible simply because we were who we were or we didn’t get all of the education we should have.
I was told I would never be able to afford college or make above minimum wage. Had that narrative been different, I would have had a lot more hope when entering into adulthood. We, the local real estate experts, need to step in.
Educating young first-time homebuyers of their wealth-building potential is critical; we’ve got to break the chain of assumed failure. Jumping into the market with an FHA loan as an owner-occupant and first-time homebuyer can open doors to future financial gains. By staying engaged with your property’s value over the years, you can strategize upgrades, expansions and leverage equity for a new investment.
2. Overcome challenges with refinancing
Challenges, such as finding a location with strong anti-discrimination laws, can be disarmed by diving into the market sooner rather than later. The fear is that people want to flee unwelcoming areas that may be harmful to them. But what are they doing in the meantime?
If they’re stuck in an area for ten years renting, why not be stuck in that same area buying a home and building equity? Teaching a buyer that they do not have to stay for the 30 years of their mortgage can be mind-altering.
Many responsible young adults still grow up with the idea that they are supposed to pay off what they owe and are stuck in the contracts they sign. Not so, in the world of real estate.
Refinancing and reselling options offer flexibility, allowing homeowners to adjust their financial plans as circumstances change. This can be used as a tremendous springboard into the area they ultimately desire.
Plus, buying in lower-cost-of-living areas (many red states) can also give them funds to finally move out of that area and into higher-cost areas (most bluer states). The equity when selling or the income from using the property as a rental can boost their abilities and give them the freedom they are dreaming of.
3. Break the rental cycle
It’s important that we remember to educate regarding the neverending rent cycle some of our clients are caught in. Renting in the perfect area might seem like a short-term solution, but it often means contributing to someone else’s mortgage instead of building your own equity.
Waiting for the perfect moment can hinder the accumulation of generational wealth. Financial planners and lenders take the time to build strategies and game plans with buyers who aren’t yet ready. We should offer the same. Sit down with your client and explain the long game.
Take the time to map out a road to their future. Sometimes showing that their goals are achievable in a few short years can be shining a light on something they never realized.
4. Educate and empower
Real estate agents play a crucial role in educating and empowering homebuyers from all walks of life. Beyond negotiating deals, we serve as neighborhood experts and community resources. By collaborating with a team of professionals, homebuyers can navigate challenges, improve credit scores and create a tailored savings plan.
Connecting our clients with financial advisors, certified public accountants, and mortgage brokers ensures a comprehensive strategy for success. Don’t shy away from taking some time with the clients who are in a longer game to get the home they want.
You could end up helping them from a condo to a townhouse to a lavish single-family home. And you’ll be the real estate resource they recommend to their family, friends, and colleagues.
5. Address the generational wealth gap
The issue of generational wealth is a long-term concern that often holds back progress. By taking steps today, individuals can forge a path forward and break free from doubt and discrimination. Down payment assistance programs and other public services can be invaluable in supporting those starting their homeownership journey, providing a much-needed boost in capital.
Connect with the professionals and organizations in your area to build a strong arsenal to disarm anyone programmed by years of negative thoughts and stigmas.
I don’t like to hear that people are waiting for the perfect time. I don’t like to wait for anything. (I’m a Leo.) Waiting for things to be “just right” means missing out on valuable opportunities in between. That’s true in so many different ways throughout our lives.
LGBTQ+ and other minority homebuyers should actively engage with real estate professionals, take advantage of available assistance programs, and prioritize building their financial future.
Remember, the key to success is not just finding the perfect home but creating a plan for lasting financial success. As Realtors, we are an invaluable resource when it comes to opening people’s eyes to their futures full of wealth and security.
Zak Shellhammer is a broker, coach and consultant. Connect with him on LinkedIn and Instagram.