HOW THE REAL ESTATE INDUSTRY CAN SAVE AMERICA
By: Billy Procida, President, Procida Funding, LLC
The real estate industry lead our country’s most recent economic growth and benefited handsomely from it. Today, the government isn’t going to lead a recovery and doesn’t really have the capacity to even if it was interested. It’s up to us to save America – everyone in the real estate food chain – developers, architects, brokers, engineers, lenders and investors.
We’re not going to do it by building McMansion subdivisions, luxury high-rise condos or shopping malls. While we do need to find a way to finish what we started, the real job before us is much more challenging, some say dangerous, and thus, potentially more profitable. We need to take our nation’s most dangerous, blighted and gang-ridden areas and make them as safe and habitable as they once were.
How this will save America is simple. Other than our military budget and foreign aid, which we will never have any say in fixing, the number one drain on our is everything that goes with entitlements; prisons, welfare, homelessness, crime, etc… We know that bad neighborhoods produce little to no tax revenue and an abundance of human despair. We know good neighborhoods produce taxes, much of which go to subsidize bad neighborhoods, and we know the quality of life is far better.
The problem, challenge and opportunity for all of us who have nice cushy lives building, buying, and financing all kinds of high end real estate is that the industry will soon realize what was is no more. While tomorrow’s homebuyers may not remember Black Monday, the savings and loan crisis or 18 percent interest rates, the memories of this era of people living beyond their means will linger for a long time.
It’s a simple strategy: An army our industry’s professionals must take back the bad neighborhoods. (Actually, using the military and former military would help.) Our mantra is “buy low, sell high” and you can’t buy buildings or land any lower than you can in our country’s most decrepit neighborhoods. And if you fix them you will certainly sell high.
The blueprint is there. See Harlem, where, in the early 90’s, you could buy empty brownstones for a dollar. Today, those same brownstones sell for $1 million. See the Fort Apache section of the Bronx, a once vacant neighborhood, and also the place where I cut my teeth as a developer. I started by partnering with New York City government. I was the only person to respond to their RFP. We started by redeveloping, not a single building, but an entire block. We put together a team of professionals, each of whom brought something different to the table. We hired people from the community and they became not only involved, but excited about what was going on. Soon, we moved onto other blocks, other developers came in and today, the neighborhood is vibrant, prosperous and tax producing. The children who live there don’t see crime. They see beautiful buildings and people going to work as policemen, nurses and tradesmen.
It’s not a trick. It’s simple. It just requires all of us to start looking, start buying, start fixing, get involved in the community, forge alliances with churches and nonprofits. Don’t forget the local members of the Bloods and the Crips. They didn’t join the gangs to deal drugs, they joined to be part of a family. All they need to know is they can make more money in real estate than in crime.
We need big name real estate players – developers, architects, banks, brokers, etc.. – to participate. Make a larger commitment than a single project. Open an office in the ghetto. Solid real estate development will lead to improved inner cities, increased property tax revenue, reduced government expenses, an improved quality of life and a better America. This will be the subject of my upcoming speeches and I hope to see you there.