Kyara Gray has always been fascinated by transformations. Growing up in small town Pennsylvania, she watched farmland routinely sold and turned into housing developments. “As we drove around town, I’d point out the window telling my parents to buy this land or that house,” says Gray, who now runs a multi-seven-figure real estate company, Charm City Buyers, with her husband, Khalil Uqdah.
After graduating from college in 2011, the plan was to climb the corporate ladder, get a dog, and invest in real estate as a side hustle. In just one year she had a well-paying job in insurance, a Lhasa Apso named Duchess, and her first rental property. Less than a decade later, she stepped out on her own. She and Khalil have grown their real estate empire to include developing several blocks of residential housing in Baltimore in addition to over 20 rental units and a construction company.
“Our projects are knock-down, tear out, total renovation houses. We turn them from vacant eyesores to beautiful homes that create community,” says Gray. What’s more, she and Khalil not only create generational wealth for their family—they have a seven-year-old daughter—but they have also transformed their community and shown others how to amass wealth for themselves.
I caught up with Kyara after she and Khalil won a bid for a $15 million dollar new construction community in Baltimore that will include 20% affordable housing. Here are some of Gray’s best tips if you’d like to follow in her footsteps.
Stephanie Burns: How did you save up to buy your first property so soon after graduating from college?
Kyara Gray: Working hard, saving on rent, and not stressing about student loans that had low interest rates. I had a job that paid well and a roommate to split the costs. Khalil had graduated a year before me and was living at home so he could do the same. Once we decided we were going to be together for the long haul, we thought about how our financial future would look.
From vending machines to DVD rental units, we considered a lot of different investment options. But we settled on real estate because of the impact it can have and the revenue it can generate. We looked into deals, found a 3-unit shell of a property, and knew the numbers worked. Because the neighborhood had a tough reputation, most people weren’t interested. We purchased the property for $26k cash but it needed a six-figure renovation. So we found a local organization focused on developing communities in that neighborhood. They provided the funding for the renovation which we finished in seven months.
Burns: How did you get up-to-speed educating yourself on real estate so fast?
Gray: Once we made the decision to leap, we took consistent action every single day to get closer to our goals. We googled properties, went to real estate investing networking events, researched terms and strategies, and started meeting with people in the industry. Every day we were taking small steps towards our dream.
One of the reasons we’re so passionate about mentoring other people is because, when we started, we didn’t have mentors answer our investment questions. We made plenty of mistakes and lost money in different situations. But we persevered. The difference between us and others who don’t make it is we persevere and they quit. We took the challenges as valuable lessons and turned them into fuel to make better decisions.
Burns: What’s one of the toughest lessons you learned as entrepreneurs?
Gray: If you cut corners financially, you’ll lose time, quality, price—or all three. One project we did with a friend who was just starting a construction company ended as a disaster. We thought we were saving money but the job cost us $30,000 more than we budgeted and required additional time. We had walls up that had to come down so we could redo the framing and more. Now we know—and tell our mentees—to spend the time making your money go further. That means spending more time screening and choosing tenants, interviewing workers, and researching properties.
Right now in Baltimore, everyone wants to talk about getting houses for as little as a dollar —yes, literally a house for $1. But like anything in business, you have to think beyond the financial cost to purchase and focus on the total cost and the value. We encourage people to stay rational. Don’t get so excited about getting into a deal that you lose sight of ensuring its success. Focus on the development strategy and the total benefit including community impact.
Burns: How were you able to scale your business to six figures in just two years?
Gray: One of the things we teach our mentees is how to leverage OPM or Other People’s Money, like we did with the neighborhood organization that funded the renovation on our first property. That property brought in almost $3k per month, so we were able to snowball a lot of those funds into our next property and so on. In just three years, we had more than six figures in rental income from purchases. Neither of us quit our jobs until five years ago, so we were able to use extra income for our real estate endeavors. We sacrificed vacations and didn’t even buy our personal home until owning multiple properties.
We also didn’t tell people about the projects we were purchasing until we had accumulated about ten rentals in our portfolio, which was hard. It’s tempting to want to post on social media or tell your friends and family what you’re doing, but we focused on the work so we wouldn’t have to deal with naysayers. Khalil would go to Home Depot before work to pick up supplies, I’d tile floors in the evening, he’d paint. We were scrappy until we grew and could outsource those tasks.
Burns: What made you go from flipping and investing in properties on your own to teaching others how to do it and transforming communities?
Gray: A few years back, we could have managed the portfolio and lived off rental income. But I wanted us to push the envelope and breathe life back into communities in Baltimore that had been forgotten and overlooked. We started that by buying multiple properties on one block in the city and transforming it. We wanted to make an impact, but knew we couldn’t buy every house and do every block. We also knew that one of the biggest barriers to entry is information. So we started a mentorship group called The NEXTGen Accelerator to teach others how to invest in real estate. It’s development without displacement. And it’s the legacy I want to leave behind.
Burns: How does someone know if investing in real estate is right for them?
Gray: It comes down to figuring out if your goals are long term or short term. If they’re short term, yes, you can get rich flipping houses. Yes, you can build wealth by investing in rental properties. Cash means flexibility and freedom. Long term goals mean building generational wealth and legacy. So honestly define your goals. For us, making an impact for our family and the community is important. There are very basic human needs and, according to Maslow’s Hierarchy of Needs, shelter is a basic physiological need that provides safety and so much more. We want to help people with one of their basic needs.
Burns: What advice do you have for female entrepreneurs who want to try their hand at real estate?
Gray: Build an effective team. One of my team members is my husband and we split the duties so we have 48 hours in a day instead of 24. But, the majority of people in our programs are single women doing this on their own. Fortunately, they have a great team: reliable lenders, solid contractors, and a network of experienced people to help them get things done.
Post-pandemic, we’re living through a renaissance. I’d encourage women to think about this moment in time and the future. In Baltimore, people often look around and see disinvestment. For a child, that can have extremely negative effects. It teaches you how to feel about yourself. If no one cares about your neighborhood, maybe no one cares about you. It’s tempting to hope that someone else will revitalize a community but, if you wait for someone else to create change, it can be hard to have a say in how that change looks. Instead of sitting back, lead the way. This isn’t about numbers, it’s about neighborhoods. This isn’t just about income, it’s about impact.
This Week's Top Stories: Canadian Real Estate Slowdown Is Just Getting Started & “This Time Is Different” – Better Dwelling – Better Dwelling
BC real estate: 40% of Cullen Commission focuses on sector – Pique Newsmagazine
Despite being unable to determine the exact impact money laundering has on home prices, the real estate sector is of top concern to the Commission of Inquiry into Money Laundering in B.C.
Of the 101 recommendations Commissioner Austin Cullen made in his June 15 final report, 40 are directly related to real estate, and several others are ancillary, such as proposals to strengthen anti-money laundering (AML) policies within financial institutions and the asset forfeiture legal regime, as well as greater controls on notaries and lawyers, who process transactions.
Despite the apparent problems in the industry, Cullen poured cold water on prior attempts to peg a precise price increase on homes due to money laundering.
While his executive summary states, “money laundering is not the cause of housing unaffordability,” he clarifies within the report that he examined whether it is “the” cause or “a main” cause — as it may be perceived publicly. Cullen found no such proof but nevertheless concluded the real estate sector is vulnerable.
Cullen said the reasons for increases in housing costs “are many, and they are complicated.” He cites housing supply and demand and interest rates as more proven factors.
Cullen examined the 2019 expert panel report of professors Maureen Maloney, Tsur Somerville, and Brigitte Unger titled Combatting Money Laundering in BC Real Estate, which did prescribe a figure for money laundering in real estate — about a 3.7% to 7.5% increase in prices. But Cullen noted that the estimate came with caveats and uncertainties. The model the panel used was “an exercise in speculation and, ultimately, guesswork,” said Cullen.
Cullen took time to separate what he perceives as a common mistake in the public discourse — that foreign investment and money laundering go hand in hand.
Cullen relied on the Canada Mortgage Housing Corporation’s conclusion foreign investment was not a significant driver of real estate prices in Vancouver, based on home ownership data from 2010-2016.
He noted, however, that defining foreign investment can be difficult and “witnesses disagreed about whether foreign investment plays a significant role in Vancouver’s housing prices.”
Simon Fraser University professor Joshua Gordon and University of B.C. professor emeritus David Ley testified how foreign capital can explain the decoupling of local incomes to home prices in B.C. However, such capital may not show up as direct foreign investment in home ownership data; instead, it is foreign money transferred into homes owned by newly established residents or via beneficial ownership structures that can obscure the real picture.
“It became clear as the evidence developed before me that there is disagreement in the academic community about what should be considered ‘foreign ownership.’ Is it limited to beneficial ownership by persons or entities based or resident outside Canada? Or does it extend to purchases made largely with funds earned outside of Canada?” asked Cullen, to which he replied to his questions that “resolving these complex issues is somewhat outside the ambit of my mandate.”
Cullen noted Gordon’s position that it is difficult to determine the origins of foreign capital and, with respect to China, the money being transferred is often escaping capital export controls set by the Chinese government.
He dispelled the notion that foreign investment, particularly from China, is money laundering. And Cullen expressed concern that, in his view, public discourse had reached such a conclusion.
Cullen noted racist stereotyping of investments in real estate originating from China, as University of B.C. professor Henry Yu testified to, must be weeded out from “legitimate policy questions relating to foreign ownership of real estate in the province.”
Cullen concluded that he could make no conclusive finding on money laundering or foreign investment, however defined, is a “primary cause” of home price increases in B.C. and steps to address money laundering should not be viewed as a “panacea for housing unaffordability.”
Ultimately, more study is required on the matter, concluded Cullen.
Ron Usher, general counsel for the Society of Notaries Public, said the conclusions may frustrate some members of the public, however they are not surprising given it is difficult to track money laundering.
“I think people were understandably very interested in that. But I think it’s appropriate for him to say, ‘We just don’t have information.’ Well, of course, we don’t because, you know, people don’t tick a box on a form saying, ‘I got this money from money laundering or a predicate crime,'” said Usher, who followed the daily testimony over two years as an intervenor.
Recommendations run deep into real estate sector
Despite not finding answers to such a significant question in the public discourse over the past 10 years, Cullen lays bare 40 recommendations for the real estate industry, now regulated by the 2021-established B.C. Financial Services Authority (BCFSA).
His recommendations suggest that real estate licensees are largely uneducated on AML measures and that both managing brokers and sub-brokers require education “focusing on the detection and reporting of fraud and money laundering in the industry.”
Cullen also recommends the BCFSA, a government regulator, put in place measures for better data collection and that it implores real estate licensees and notaries to record source of funds information should the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) not do so on a federal level. He also wants BCFSA to mandate AML programs at each brokerage as a licensing condition.
Seventeen recommendations directly relate to mortgage brokers, who are overseen by the Registrar of Mortgage Brokers within the BCFSA.
Cullen wants brokers to have extended criminal record checks and more clearly defined responsibilities, including new reporting mandates under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Cullen also recommends all legal owners of mortgage charges are reported and that this information be available through the public land titles registry of the Land Title and Survey Authority. Presently, one is unable to conclusively determine, from flings, all of the owners of a registered mortgage charge.
Cullen is also calling for greater penalties and repayment of profits from proven unscrupulous brokers.
As for real estate licensees, Cullen has recommended employees of developers be brought within the licensing scheme. Today, many developer representatives effectively sell homes (“pre-sale” units) without any regulatory oversight.
Cullen also identified some legal matters to resolve, such as how courts cannot refuse to enforce debts made with funds of suspicious origin. As such, he recommends a source of funds declaration in foreclosure proceedings, at the judge’s discretion. This recommendation stems from Cullen’s examination of numerous foreclosure filings by alleged money launderer and casino cash provider Paul Jin.
Meanwhile, sunshine policies are a prominent set of recommendation for Cullen, namely by populating the B.C.’s Land Owner Transparency Registry with historic data within three years. He also recommends the Land Title and Survey Authority have a clear and enduring AML mandate, including the ability to “more readily” share data with other agencies.
Finally, with all such measures, Cullen recommends the Ministry of Finance analyze how such changes may impact housing prices.
Cullen thirsty for more data
Cullen emphasizes in his report the need for a beneficial ownership registry for both real estate and corporations, with the latter requiring a pan-Canadian approach. Contrary to some witnesses he heard from, such as journalists and Transparency International Canada, Cullen says a small search fee ($5) for beneficial ownership land titles is acceptable if government deems it so for operational purposes. However, Cullen suggests no such fees exist for a beneficial ownership registry of corporations. No fees should apply to law enforcement and regulators, noted Cullen.
With respect to data, Usher said tools such as land title registries, which are “secure and reliable,” are increasingly being used by government agencies. He said Canada Revenue Agency could more easily track land purchases these days to weed out tax evasion and money laundering.
“It’s easy to come up with lots of rules,” said Usher.
“What we really need is a formal process of a notice of acquisition of real estate for CRA and a notice of disposition of real estate for CRA for every transaction.
“We need to get the right information from the right people at the right time,” said Usher.
MiB: Jonathan Miller on Residential Real Estate – The Big Picture – Barry Ritholtz
This week, we speak with Jonathan Miller, who is CEO and co-founder of the real estate appraisal and consulting firm Miller Samuel. He is an adjunct associate professor at Columbia University’s graduate school of architecture and planning. he also serves on the Mayor’s Economic Advisory panel and the New York State Budget Division Economic Advisory Board. His research and analytics powers the back end of some of the larger real estate brokerage firms.
We discuss the pullback in real estate demand due to rates almost doubling; contact volume is down, and has been trending that way since March. The collapse in inventory is also to blame, as has the fall in affordability.
During most real estate slowdowns, sales activity slows immediately, as inventory rises. But prices tend to take a few years to reflect the new market, awaiting seller capitulation. Miller hopes we might see a faster adjustment given the recent big runup in home equity.
He also explains why it is so challenging to convert urban office towers into residential buildings. Big cities like New York and San Francisco find themselves with a surplus of office buildings that are running about 2/3rds empty, while there are acute shortages of residences at most price points.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week Perth Tolle with founder of Life + Liberty Indexes, index provider and sponsor of the Freedom 100 Emerging Markets ETF. The first-of-its-kind strategy uses personal and economic freedom metrics as the primary factors in its investment process. Prior to forming Life + Liberty Indexes, Perth was a private wealth advisor at Fidelity Investments in Los Angeles and Houston and had lived and worked in Beijing and Hong Kong, where her observations led her to explore the relationship between freedom and markets.
Jonathan Miller Favorite Books
Fins: Harley Earl, the Rise of General Motors, and the Glory Days of Detroit by William Knoedelseder
The Reckoning by David Halberstam
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