Investing in land and residential property have long been avenues championed as ways of building wealth, and there’s no blueprint or get-rich-quick way to obtain riches through investing. But there are right and wrong ways of creating wealth-building opportunities that come from owning and managing a portfolio of properties.
Cesar Pina, a New York business associate of “Breakfast Club” radio co-host DJ Envy, was arrested two weeks ago on Oct. 18 for allegedly being involved in a real estate Ponzi scheme – a seemingly obvious wrong way to go about perfecting a portfolio.
According to federal prosecutors, Pina aimed to flip homes with the popular DJ and radio personality. Pina frequently traveled around the country conducting real estate seminars, teaching other potential investors about how to create wealth through investing in residential and commercial properties. He also sometimes appeared on the nationally syndicated radio show as a guest of DJ Envy, promoting the popular seminars.
Federal authorities claim Pina defrauded people out of millions of dollars, and he’s been charged with one count of wire fraud.
The alleged scheme goes back to 2017 when Pina started investing in properties to renovate and resell while also promising investors a 20 to 45 percent return on their investment in five months and owing several investors who haven’t received promised payments on their projects. Pina allegedly uses some money for personal use and uses new investments to pay back old investors.
Federal prosecutors claim that Envy’s business associate built trust and credibility with investors by hosting the seminars with DJ Envy before he started the alleged scheme.
Envy claimed that he “helped so many people” as he would often promote the project on his radio show. According to a local news report in New Jersey, investors who are alleged to have been ripped off claimed they only invested in the project because of Envy’s public name and approval of Pina as a credible businessman.
But if people attempt to follow the Envy-Pina model in real estate investing, they could be in for a surprise. According to experts in real estate investing, there isn’t a lot of money to be made in crowdfunding efforts, like Pina employed, especially when there are too many players.
“Real estate requires you to be a student,” said Jewel Tankard, CEO of The Millionairess Club, a network of forward-thinking women celebrating accomplishments and mentorship to achieve mega success.
So, how does one go about their first start in taking on real estate property? Tankard, who now owns several properties in multiple states across the country, says newcomers to the industry need to start by finding a mentor.
“The average investor starts off with one or two properties and they never scale from there,” she says. “Maybe someone has a had a bad experience with the first or second property and it makes one leery, but having a mentor you can trust Is important.”
Tankard says there is a checklist one should consider when investing in a residential property.
“You have to make sure the property has a clear title, ensure the property taxes are paid up, find out if there are any HOA fees, make sure there’s an inspection, and other thing that new investor should be aware of in the beginning stages.”
It took having a trusted mentor for Tankard to get through the early process of owning residential properties in Detroit. She believes the journey is more than just knowing the to-dos from a book, and it’s why she takes newly interested property investors on tour to give in-person realities of the business.
She explains that she meets up with people in neighborhoods, and “I tell them, see how money is being spent, there’s vitalization happening. Show and tell is important,” Tankard says it’s important to helping one understand where and how to invest and seeking hand-holding and trust mentorship is key to navigating Detroit or any housing and land market.
The Detroit native and reality TV star of BRAVO’s Thicker Than Water now lives in Tennessee but first found it lucrative in 2017 to start investing back into Detroit – the city she still calls home.
“Detroit is really a gold mind,” she says. “You have companies buying up blocks, buying up 30 houses at a time, that don’t look like me, but using our people as tenants to be in those houses to help them create wealth and that’s a problem.”
Tankard says the market had been prime for real estate investors for years, as they bought low-valued property to rehab and eventually turn into a profit with rental leases. Tankard visits her hometown often and currently has ten residential properties centered in the city’s Midtown neighborhood.
Doing real estate needs to be done the right way, and Tankard believes the way of doing so is for people, particularly in the Black community, to become more informed.
“I definitely have an obligation to share what I know with others,” Tankard explains. “I’m blessed because someone took me in and held my hand in the process. We have to really learn about creating wealth by creating cash flow, and the best way to do that is by real estate.
“Generationally, if you go back to Rockefeller and even slavery, it was all about land and home ownership, because whoever owned the property created the laws and the policies.”
Oftentimes, she explains, people don’t get involved in the business simply because of the unfamiliarity of it and the allure of becoming an overnight success. But she urged that understanding real estate and doing it the right way is what builds generational wealth.
The road to real estate investment isn’t the same for everyone, but the desire to gain knowledge on the industry emerged for Darius Barrett while he was in college at Michigan State University.
A year after his December 2014 graduation, and just two years ahead of Tankard’s real state journey, Barrett, a Detroit native, young and ambitious, had already bought his third residential property by 2015. He eventually shifted from a career in engineering to a real estate journey as a way to provide generational wealth and stability for his family.
He was on a buying spree for affordable property in the city at a time when the value of land and physical residential structures in Detroit had dropped incredibly low.
“I’m an entrepreneur at heart,” said Barrett, Managing Principle at Revere Development.
“Real estate was the first steppingstone for building legacy for my family.”
Barrett recalls being of high school age when the housing market crashed in 2008 and witnessed his family lose their homes.
“It was at that point; I made a vow that we’ll never be in a scenario like that again. We’ll never be homeless; we’ll never not have a place to live. I was determined to buy real estate and provide an opportunity for my family and generate income.”
Barrett began that journey and has some core principles he goes by, and he suggests the same to someone interested in starting in the industry. He says one must “desire, educate, and execute” one’s vision in order to prosper. He also believes it’s important for real estate prospects to educate themselves on the business first, as well as find a mentor and productive organizations to join.
“Running reps are important,” he says. “Reps can help you refine the process and if you’re not doing that, and your first rep is the house that you’re buying, you’re more than likely going to run into a lot of challenges and maybe an obstacle you don’t have the capacity to overcome.”
Barrett suggests joining organizations such as the Real Estate Association of Development (READ), Building Community Value Detroit, and Capital Impact Partners to find a mentor and learn the ropes before hopping into a potential Ponzi scheme and losing money that could have gone toward building a reputable portfolio.
“I’m an alumni of most of these programs and all of them allowed me to gain insight and knowledge and processes and systems to have a roadmap in identifying strategies.”
In addition to his private real estate business, Barrett works for a commercial real estate company on hundreds of million-dollar projects, applying tools from every sector of the business industry to further his growth and portfolio.
“I’m never done learning,” he says. “Learning is essential to your growth, your progress, and success. I believe the more you know then you can apply it.”
Both Barrett and Tankard believe that understanding real estate and doing it the right way builds generational wealth. A journey both Detroiters and many others in the city are finding out and doing so successfully.
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