The Poor Man’s Hedge Fund

Everyone should be a hedge fund manager today, but this time it is for your own account. This time around, the benefits should flow to Main Street, and not just for Wall Street.

And here is the most shocking part -- the poor man's hedge is rooted in an extremely accessible version of modern day, traditional homeownership. Or better still, other traditional forms of homeownership and select communities that you and your family and friends choose to invest in, non-traditionally. What I am talking about here is a fundamentally new era of wealth creation.

Read on....

I fully understand that real estate, and specifically residential home ownership real estate, was at the very core of countless American families losing their shirts in the 2009-2013 economic crisis; but this is a bit of a ruse. That is not totally true. It wasn’t homeownership itself that killed homeownership ~ it was greed and abuse of homeownership finance; rules, rights and regulations.

Keep reading....

In the recent economic crisis, massive amounts of un-checked greed, combined with a massive, national case of financial illiteracy -- at all levels of the educational and economic scale -- lit a fuse to a national economic crisis not seen since the Great Depression. And the crisis was not about 'poor people' either. Fact: middle class white men, had more subprime mortgage foreclosures as a group, than all other minority groups combined, according to the Mortgage Bankers Association. But this is also a sideline story.

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Even if you have very little money to invest at all, the Great Recession shouldn't sour you to the value of investing in real estate, or more so ~ investing in yourself in the 21st century. That was then, and this is now. And boy old old, is the time now.

News Flash: done right, your home is your new hedge fund against poverty and irrelevance. The easy explanation here is that in most markets across the United States, market decline has bottomed out, and in an increasing array of markets, home and real estate prices are on a quiet (and sometimes even not so quiet) rise. This said, simple homeownership is not really what I am talking about.

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Warren Buffett once said, “when others are greedy, be afraid, ...and when others are afraid, be greedy.”

Right now, investors and average citizen alike remain frightened about inner-cities across America. The thing is, they are gold mines. Literally. They are all centrally located real estate. Each and every one of them, and “they aren’t growing any more land" in America either.

America is a funny place. Land of opportunity as it is and all, we can also make some really dumb decisions as a culture. To put it simply, mainstream folks basically moved out of what we today call our ‘inner-cities’ in the 20th century, because black folks started moving in. This is not myth or me being dramatic.

Former President George H.W. Bush (the father) lived in Compton, California in like 1958, because it was a feeder community to Long Beach, which is where he served in the military. Because the father lived there, so did the sons, of course. Which means, Compton, California — the ‘hood’ today — was home to two U.S. presidents and one governor. Now where is the historical marker for THAT house? Smile.

Or take inner-city Los Angeles. 15 minutes from downtown Los Angeles. 15 minutes from the Ports (with no traffic). 15 minutes from Hollywood. 15 minutes from the beach. The BEACH, for God’s sake! And now, because black people lived there then, and Hispanics live there now, we call it an ‘inner-city?’ No, it is a gold mind. And it is coming back — stand by for its resurgence.

The reality is that America was the only ones silly enough to place so-called poor people right in the middle of centrally located real estate.

The new so-called dream was then to move out to newly created suburbs, but now we find that our quality of life sucks. Spending two hours driving back and forth each way daily, wears even the most capable individual down over time. And quality of life goes out the window when you are spending 4 hours a day IN YOUR CAR, train, or whatever gets you there.

In Europe, you have inner-cities, and they are different. Very different. An inner-city in France is called Paris. Centrally -- located --- real estate. Hello.

Or take Atlanta, where I now live and my family calls home. Atlanta is basically Los Angeles, 40 years ago, value and opportunity wise.

I drive from my home in Atlanta, and within 5 minutes time I see the equivalent of residential shacks — in the middle of Atlanta city limits.

Shacks selling for $7,000, $15,000, $30,000, and relatively nice homes selling for $50,000. Unbelievable. All of this land, will be claimed or reclaimed within the next 10 years, inner city community by inner city community. And values will not rise, they will explode. It’s really just simple math. You heard it here first.

News flash: every inner city in America will be reclaimed and revitalized within the next 5-10 years. You heard it here first.

In Atlanta, around the King Center, where Dr. Martin Luther King, Jr. pastored at Ebenezer Church and called home, you see young 20ish-aged white kids riding bicycles and wearing short pants and flip flops in the spring. This is not a racism commentary, and these are not tourists. They live there!

This was a traditional ‘inner-city’ neighborhood in Atlanta, but young people with brains and common sense (and no allergy to black and brown people) saw opportunity, affordability, and proximity to work. They got what I call in my new book, The Memo. It will be transformed.

Or take Detroit, Michigan, where my organization Operation HOPE will soon be on the ground opening HOPE Inside and HOPE Business In A Box Academy locations, working very closely with Mayor Michael Duggan and city leaders there.

People seem to have written off Detroit, but this makes no sense whatsoever. It's just not smart to right off Detroit.

Beyond the fact that 55 years ago, Detroit was the richest city in the world. Richer than Paris, London and New York. But ignore that. It’s irrelevant.

I am talking about homes — land and residential homes — selling today for $3,000, $7,000 and $15,000, in a major American city, near waterways, and across the way from CANADA! And the transformation of Detroit is already happening. As you are reading this article. Once again, the salvation is young people — young professionals — moving back into downtown. Not allergic to black and brown people. And then you have the founder of Quicken and others, investing heavily in downtown Detroit.

I could literally go on forever, but if you have not gotten the point by now, you will miss it no matter how many words I write here, respectfully stated.

Inner-city communities, and residential homeownership, as an investor in low-wealth communities, can no doubt become your ‘hedge’ against poverty and financial irrelevancy in 40 years time.

Today I can purchase a complete home for $15,000 in Detroit, rehabilitate it, and rent it out for monthly income, but I cannot purchase even a closet of a condo in the city limits of say Los Angeles today, for $15,000. In fact, there is not even development-available land in Los Angeles. It’s all gone, and it in time, it will all go up (in value, and relevancy).

When I speak of saving our inner-cities, I am not talking about charity or guilt. I am saying that this just makes good common sense. That the mission of Operation HOPE, the organization I founded after the Rodney King Riots of 1992, is a global silver rights movement, or a radical movement of common sense.

The last movement of civil rights, was waged and won in the streets. The next movement of silver rights, will be waged and won in the suites.

If you get some extra money, or arguably if you have some consumer spending limit availability on a credit card (that of course won’t break you), don’t go purchase a fancy new flatscreen television, or the newest stereo system — go and PURCHASE A HEDGE FUND FOR YOUR FAMILY’S FUTURE! And yours.

As I said in my bestselling book, “How The Poor Can Save Capitalism,” Inner-cities in America are not tore up waste lands, they are the last bastion of capitalism, and emerging markets in America. And you need to go play an active role in their revitalization. Before someone else, does….

Onward, with HOPE

Let’s go.

John Hope Bryant is the Founder, Chairman and CEO of Operation HOPE and Bryant Group Companies, Inc. Magazine/CEO READ bestselling business author of LOVE LEADERSHIP: The New Way to Lead in a Fear-Based World (Jossey-Bass). His newest bestselling book is How The Poor Can Save Capitalism (Berrett Koehler Publishing).

Bryant is a Member of the U.S. President's Advisory Council on Financial Capability for Young Americans, co-founder of the Gallup-HOPE Index,and co-chair for Project 5117, which is a plan for the rebirth of underserved America.

Bryant is the only bestselling author on economics in the world who is also of African-American descent.

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Photo Credit: Photo credit: Lending Memo

Photo Credit: A. Golden