Description

Episode 33 – The Wilson Wealth Show

New South Real Estate

Host: Ablavi Gbenyon-Little

Guests: Jahlil Lord, Derrick Salter and Herman Hicks, Maurice Wilson & Marcus Johnson

Summary:

Nashville, Charlotte and Atlanta – an area dubbed the Piedmont-Atlantic mega-region – is having a moment. Join Maurice Wilson, founder of Wilson Wealth, for an in-depth look at these dynamic markets on this episode of The Wilson Wealth Show. Host Ablavi Gbenyon-Little takes a distinguished panel of guests with a range of business, real estate and investment expertise through an overview of how “New South” economies are doing in this post-pandemic moment. The panelists include real estate developer Derrick Salter, certified wealth strategist and banking executive Herman Hicks and financial services provider Jahlil Lord. Rounding out the group is Nashville-based Marcus Johnson, a planner with Wilson Wealth. You’ll come away from this lively conversation with a clear sense of where opportunities (both real estate- and business-related) are both hottest and most affordable as well as a practical list of factors to consider before making any commitments. The group also considers the impacts of rising interest rates and remote work on the commercial real estate market and digs into pockets of affordability for newer investors. They also take a look at the outlook for Airbnbs and how to accumulate that all-important liquidity. It’s all about closing the “wealth gap” and building solid, transgenerational financial rewards for Black-owned businesses and families. Join us!

We hope you enjoyed this episode of The Wilson Wealth Show! Please click here to explore our archive of previous shows!

Key Quotes:

• “The interest rates are extremely high compared to what we’ve been accustomed to seeing, which may be the new norm.” (Marcus)

• “What’s important right now is to really make sure you structure the right deal on the front end when you get into commercial real estate.” (Herman)

• “Real estate is completely based on cycles. A lot of people have not seen this cycle (featuring higher interest rates) before, but this is not anything new.” (Herman)

• “In a city like Nashville … this is not a good market to be just now entering Airbnb. You need to find that next market. Places like Huntsville, Alabama, or places on the coast of Florida that are not as developed yet.” (Derrick)

• “People (in Charlotte) are waiting on the sidelines, waiting either for interest rates to go down or some type of landslide in (real estate) prices.” (Jahlil)

• “Properties (in Charlotte) have appreciated so much … (and) buyers are not motivated because of those high interest rates.” (Marcus)

• “Charlotte as a city may be slowing down but it’s actually impacting the surrounding areas positively.” (Jahlil)

• “Atlanta is still a place where you can find real estate deals if you know where to look. I don’t think there are as many deals … but if you’re willing to go to more rural areas further out from the city, you can definitely find deals.” (Ablavi)

• “Atlanta has been a touchstone for the movement … If you own a Black business, you have to have some exposure to Atlanta. It’s kind of like our New York.” (Maurice)

• “A lot of Black folk in Atlanta are starting their own companies … and we can definitely help contribute to closing that wealth gap.” (Marcus)

• “The cost of living (in Huntsville) compared to Nashville, Charlotte and Atlanta is dirt cheap. Your dollar is going to stretch a whole lot farther there.” (Derrick)

• “Business-wise I would headquarter in Atlanta for one reason: I’m no longer a Black business. I’m just a business. Atlanta has transcended.” (Maurice)

• “You’re not just going to thrive (in Atlanta) because you’re a minority. You’re going to thrive because business is booming ... It is like the mecca for us and you can’t beat it.” (Jahlil)

• “There’s just so much opportunity for everybody to be successful (in Atlanta) and I think that that is part of the allure of the city. It just depends on lifestyle.” (Ablavi)

What We Covered:

• The state of commercial real estate in Atlanta, Charlotte and Nashville (what the Regional Planning Association calls the Piedmont-Atlantic mega-region or “New South”).
  • Herman Hicks breaks down the landscape in Nashville: Post-pandemic vacancies have opened up buying opportunities, even given higher interest rates.
• Factors to consider when structuring a commercial real estate deal:
  • Loan-to-value ratio.
  • Cash flow.
  • Leasing options.
  • Understanding tenant profiles and qualifications.
• About the very real impacts of remote working on the commercial real estate space.
• How tenants can maximize leases by leveraging “tenant improvement” allowances.
• All About Triple-Net Deals:
  • A lease between a business and the real estate owner.
  • The tenant pays taxes, insurance and for everything inside the walls.
  • The owner is responsible for everything outside the walls.
• The reality of commercial real estate:
  • Don’t believe everything you see on social media.
  • The barriers to entry on larger buildings are high.
  • Equity comes from liquidity, which means bridging the wealth gap.
  • Purchasing a million-dollar property requires a minimum 20% cash down.
  • There’s nothing simple about large acquisitions and the cash flow/liquidity required.
• Where investors park their cash:
  • Tax-deferred retirement accounts.
  • Blue-chip/conservative stocks.
  • Short-term CDs.
  • Term life insurance.
• Derrick Salter takes a look at the Airbnb short-term rental market:
  • Travel has had a major post-pandemic bump.
  • More recently there has been a dip (probably due to increased interest rates and a surfeit of available rentals).
  • Social media makes it look easy (and often easier than it actually is).
  • Purchasing at a modest price point is key to breaking even.
  • To turn a profit requires owning multiple (at least 10) units.
• Derrick’s Top Three Things to Know About Running an Airbnb Business:
  • #1: Know the market you’re entering.
  • #2: Know where travelers are going.
  • #3: Know your revenue forecast and break-even point.
• Jahlil weighs in on the state of commercial real estate in Charlotte: An impasse!
  • Business has boomed, which equates to a big bump in prices.
  • Property values inflated during pandemic.
  • Post-pandemic prices were high even as interest rates were increasing.
  • The current climate is …wait and see!
• People of color are investing in real estate in Charlotte, but aren’t always as aware as they need to be of the implications of real estate cycles.
• Despite a slow-down in the Charlotte real estate market (due to interest rates and lack of inventory), the city and surrounding areas are booming and transforming!
• Jahlil’s Top Three Things to Know About the Charlotte Commercial RE Market:
  • #1: Know and clean up your financial profile before you go shopping.
  • #2: Know the demographic you’re serving (factors like age and income).
  • #3: Know your long-term goals in terms of loan structure and disposition of the building.
• Ablavi offers a look at Atlanta real estate:
  • The deals in metro Atlanta are harder to come by than they used to be.
  • Great opportunities still exist at reasonable price points outside metro Atlanta.
  • Business opportunities are abundant.
  • Black-owned businesses are on the rise!
• Maurice weighs in with the long view on Atlanta’s role in the Black business community and as a touchstone for the New South.
• Which of the top three Piedmont-Atlantic cities offers the best opportunities for real estate investors, home owners and businesses?
  • Herman: Atlanta because the price points are still reasonable and there’s more bang for the buck. Nashville and Charlotte are more recession-proof but you pay accordingly!
  • Marcus: Echoing Herman’s thoughts, he adds that cities like Huntsville and Birmingham in Alabama also offer good opportunities.
  • Derrick: He doesn’t think people starting out should try to compete in developed areas like Atlanta, Charlotte or Nashville, preferring smaller, more affordable cities like Huntsville.
  • Maurice: Atlanta and surrounding areas (where bargains can still be found) offer the biggest base for establishing a thriving business that transcends race.
  • Jahlil: Charlotte offers both a strong economy and buying opportunities (especially on the outskirts). But Atlanta is a powerhouse in terms of business climate and growth.
  • Ablavi: The investors she knows are tending to look for deals outside of metro Atlanta, where the real estate is pricier. Home ownership and starting a business may also be out of reach inside the downtown area.
• Opportunities are out there. It’s just a matter of doing the homework and seeking advice from qualified financial and business planners.

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