Real estate investing has long been a proven approach to helping individuals become their own bosses, build wealth, and achieve financial independence.
In fact, an immense 90% of millionaires reportedly made their fortunes by investing in that asset class.
But little progress has been achieved in the Black real estate investing community, with investors continuing to experience a lack of diversity and overall opportunities afforded to them, a new study by Millionacres shows. A Motley Fool firm, Millionacres is a real estate investment service.
In August, Millionacres surveyed more than 650 people about diversity in the real estate investing world. Five percent of the respondents identified as Black or African American. The real estate world encompasses many categories, including rental properties, real estate crowdfunding, commercial real estate, real estate stocks, REITs (real estate investment trusts), flipping houses, and second or vacation homes to name a few.
Among the most startling survey findings is that 7 out of 10 Black investors feel that their race affects their real estate investing opportunities. Here are other top findings of what the Black real estate investing community has to report about diversity:
- Nearly 63% say racial diversity is lacking or severely lacking in the real estate investing community.
- About 56% believe that their race affects their real estate investing returns.
- Around 48% think that early financial education (including information on real estate investing) for under-represented groups would help with lack of diversity.
To reverse matters, Black respondents offered feedback on what should be done about the lack of diversity in the business. Fourteen percent recommend more online content and resources specifically for underrepresented groups. And 11% suggest government intervention on behalf of underrepresented groups.
The findings are also significant from a financial viewpoint. For instance, the combined value of every residential home in the United States alone was $33.6 trillion by late 2019, according to real estate and rental marketplace Zillow.
Real estate investor Lisa Phillips says the 70% of Black investors who feel that their race affects their real estate opportunities is startling to some but very accurate. She says it means that most Black investors are actively navigating the racial burden of trying to invest in addition to the complexities of building a portfolio. “The consequences of that is a much higher burden to obtain just even the same results of bridging the wealth gap,” she says.
Phillips says it is a big deal because it shows that Black investors need to ensure they are deliberately going to sources for funding, education, and opportunities, such as funds and investment groups that understand these nuances. These are generally Black-owned investment platforms that will speak to these issues in a way that mainstream real estate investing platforms cannot articulate. She added this is one way of ensuring the racialized component does not inhibit the accessibility of the Black investor.
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Source: Black Enterprise