Wealth Creation with Brighton Gbarazia | Ep. 155

Intro/Outro: [00:00:00] You know what it is. That's right. It's time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It's the Money Talk with Tiff podcast.

Tiffany Grant: Hey everyone, I'm super excited because I have Brighton Gbarazia on the line and he is all the way from British Columbia, Canada. But we're gonna talk about. Wealth creation through real estate as it relates to our black and brown community. So thank you so much, Brighton, for coming on the show today.

Brighton Gbarazia: Thanks Tiffany. Thanks for having me. I'm excited to be on.

Tiffany Grant: Absolutely. And, this is one of my favorite topics, so I'm glad that you're here to talk to me about it.

So let's just go ahead and jump right in. So first of all, I didn't know that Canada had the same issues the US has as it relates to black and brown communities previously not having access to wealth creation through real estate. So I just [00:01:00] wanna give people a little backdrop about how that's similar or maybe even different than what's going on here.

Brighton Gbarazia: Yeah, I think historically speaking those, so problems are similar all across, whether it's US or Canada. In the US it's more prominent in terms that everyone's aware of it. So back in the day we used to call it redlining, which is the idea that, If you were a black person, you wanted to buy property into a community that was predominantly non-black.

People would basically find ways to make sure you couldn't buy into that property in that area. And that's a huge problem for any group that's trying to get into real estate because one of the biggest way people use to create wealth is real estate, right? People buy real estate and over time they can pass that asset on to the next generation.

And that's where you get that generational wealth creation. So for black communities who weren't able to immediately access real estate, or later on if they could access real estate, they predominantly were in areas that were just bad. So the properties themselves were not that great, which meant that they couldn't pass that [00:02:00] on to the next generation.

And why that's important is to realize that if you have a generation of group of people who, there's an asset class, which they can use to create wealth for themself, but a certain group within the society cannot access that asset class, it means that other group can continue to grow their wealth over time exponentially, while the other group is continuously trying to get that asset

so even when black communities today, younger black communities are accessing wealth instead of lower rate than their counterparts who maybe their parents had the wealth in the house and they could just transfer that to the kids, and then the cycle kind of continues on and on. So it was the same thing in any parts really around the world.

If you were pi, you couldn't access it. But in Canada we have the same similar things, probably not in the same magnitude, say as the US. But we still have the same issues in terms of just being to qualify. And even today it's something that, all lenders have to be mindful of, which is just discriminating against a particular group.

Or if you see particular groups, they're [00:03:00] getting a certain type of property In terms of the black community tends to have properties that are not really in great areas, which means their valuations in those homes are not that great itself. Or if you have a community that's predominantly black based on area.

Those values tend to be lower than if you have another area where it's predominantly non-black itself. So it's a big issue, but it did happen in Canada. It's weighed, not as prominent as it was in the us but it was something that still happened in Canada as well.

Tiffany Grant: As. Oh wow. Absolutely. And I had no idea that this was a thing in Canada.

In the US we're like, Oh, Canada, the golden children. , . So it's cause our perception of Canadians and Canada in general is everybody's nice, everybody's happy. The government takes care of you type thing. And it's just peaches and gum drops. But obviously that is not the case for all communities. And go ahead.

Brighton Gbarazia: Yeah, and we are nice. I just wanna point that game news are nice, so that's true, . It's just we have, economics is the same around the world, so you have the same issues, though it may [00:04:00] plot a little bit differently, but it's the same issues that you have throughout around the world.

Tiffany Grant: Absolutely. Absolutely. So let's dive a little deeper. So I know here in the US it has, more and more people are talking about this issue and especially because there was an article that came out, I wanna say a couple of years ago where a lady had her house valued and she had one of her white friends stand in during the valuation for the second time and they actually valued it. Double or something like that than what they originally gave her. Some of the type of things that we see here is that even to this day like home valuations or your property not increasing in value as fast as other areas around town or what have you those are some things that we're seeing here.

Are you all experiencing something similar? And also, cuz I didn't tell the audience, but your history is a mortgage underwriter. So also in that regard, when you were seeing things come across the desk, What are some things that surprised you or shocked [00:05:00] you?

Brighton Gbarazia: Yeah, I think those things, they happen everywhere.

I think what is always challenging as being human beings is we struggle with understanding that we all have inbuilt biases, right? And I always tell people like, if you're around the same group of people, everything you do is wired to appease that group of people. Because that's where you get the protection from the group.

If you don't behave like the group is gonna outcast you and then you don't get the group protection. So when you tell comes to real estate, I don't know if necessarily individual, if you're not aware that you can harbor self consciousness, which is that if you're being given the same information over and over, you may indirectly go to someone whose a colored person's home and evaluate that a little bit lower without necessarily being mindful that you're consciously doing that. Because at the end of the day, real estate, I tell people it's not that complicated. If a house from next door to you is the exact same, in terms of Home count, bedroom count, they should be the exact same as where your home could [00:06:00] be self for, because that's how residential works.

It's just a comparable, if one house of a 500,000 and you have a similar house that's the exact same within their short time frame, they should have the same valuations. So when we see the difference in valuations between, Appraisers and such like that. I don't know if it's necessarily, people are consciously trying to be biased.

It's just maybe they're not aware that they get all this information and they tend to view certain home clients maybe a little bit different and I think most appraisers are, should be aware that where, It should be a numbers game. It's not a personality thing, but sometimes that can play into it.

And I know our local broadcaster here, cbc, they did a similar story like that where they found out that yeah, communities who were non, who were colored tend to have lower appraisal than. Communities who were non-colored. And again, I think that speaks to just our unconscious bias, that we're not aware that sometimes we judge people a little harsher because we're not aware of what we're being fed every day into our brain.

And that creates [00:07:00] this, I would say like you're making it difficult for that person. To be at the same average level as someone else who is non-colored. So it can be that, but I don't see a lot, and honestly I can't say I've seen a lot, have I experienced it personally? Yeah. I think I've experienced, when you move into a neighborhood, I buy homes, and you move into a neighbor and you always feel like, or looking at you as a black person, or if you're the first black person to move into that neighborhood, you always feel like, Oh, like I gotta behave a little bit different.

Now people start, question you. Are there gonna be more black people that moves to the neighborhood? Those things are reality of, being black as a black man that I have to deal with. But again, those are more in a 1 0 1 rare off. I don't think they're norm in Canada. But they still do happen. And that's just a reality of being black in the world itself.

Tiffany Grant: Absolutely. And I'm so glad you brought up implicit bias because I just wanna plug the Harvard test that's out there about implicit bias. So it's free. Just search Harvard implicit bias and I. Have taken it [00:08:00] before a few times actually.

They have all types of demographics and stuff, so you can test for whatever, but I was surprised that even, black versus white, for instance, I was slightly biased towards the white side and me being like, So pro black, , it's ridiculous. I was very shocked at my results.

So I highly recommend anybody listening to go ahead and take that test just so you can be aware of what your biases are. And on that website they have, gender bias. They have sexuality bias, all types of different biases. So it's just a good tool to figure out like where you stand as an individual.

And like Brighton said, it's not even your fault we just get fed all of this information via media, radio. Tv, all this stuff is just constantly being bombarded, and so it's not, it's programming, so I just wanted to bring that up. Now, if someone's listening, okay. And let's say they are a black person [00:09:00] and they're like, Okay, so I know that I'm gonna have to, navigate this a little differently or what have you, what are some tips that they should keep in mind if they are looking at a mortgage or wanting to sell their house or they're looking to refinance just what are some things that they should be aware of?

Brighton Gbarazia: I think the advice I would give anyone is really the advice I'd give regardless whether you're black or non-black. I think it's just, I always tell people, Finance or buy a mortgage or get a home, a principal resident in that matter.

I tend to view it more as a lifestyle purchase. And what I mean by that is you hear a lot of talks about people saying that, real estate is a great wealth creator, and it is. Or if you buy real estate, it always goes up in value and over the long term. Yeah, it typically does. I think though, when you buy a home as a principal resident, where you're buying is really a lifestyle.

You're buying into a place where you want to build roots. You love the community and you hope to maybe grow a family moving forward from there. When people [00:10:00] say that it's an investment I tend to push back against that if it's a principal resident, because remember, just think about it logically, right?

If you have something that's an asset for you, right? It should pay you money, right? Like you have a business, you charge a certain fee, and people give you money in return for that, let's go your cash flow if something is truly an asset to you, I tend to want it to have a cash flow stream attached to it. So if you think of your principal resident and you say, That's an asset who's paying the cash flow?

That's gonna be you paying the cash flow to the lender. That's the whole point. You have to keep paying them. For you to be able to live in that home, you have to pay the utilities, the property taxes. If you have a condo, the strata fee or a homeowner association fees, all those things are cash for your paying out to someone else who takes that and then they can invest it elsewhere.

So for me, the biggest tip I try to tell anyone that's buying a home is you need to define that it is a lifestyle purchase if it's a principal. And why is that important? Because then you need to ask yourself, what kind of [00:11:00] lifestyle will this mortgage debt provide me? And once you frame that conversation in that manner, it's so much more clear for you to understand that if you get a home that has everything, the swimming pool, blah, blah, blah, But the lifestyle that home can provide you means that literally you're eating noodles every night it's not worth it, right? You're gonna think about a different home to go into that can afford you the things that make you happy. Maybe traveling, spend more time with your kids, being able to do the things and invest that you want to do, right? And that's why I frame my clients especially, is trying to talk 'em down and understand like this is a lifestyle purchase.

It might end up being a good investment, but that's not really what you're doing. You're buying a lifestyle purchase and you're hoping that it doesn't go down in value, a minimum, but it's a lifestyle purchase. And that's the biggest tip I would give people. Cuz if you can do that as a first time home buyer or a repeat buyer, you can start to understand the connection that, Oh,

I'm just looking for a home to raise my family, lay down roots. But really what I [00:12:00] want is to be able to live a certain lifestyle and I don't want my home to be hindering that ability. And that's really key for everyone. So that's the big thing I would say for me to separate, because when you start this journey, if you've already gone on it, it's highly emotional.

You're just, you're so emotional about everything and then you know, you, you end up forgetting that it's just a lifestyle purchase and people keep telling you it's an investment, and that means that you buy a bigger home, you take on more bigger mortgage debt, and then you wonder why you can't go out with your friends or why you have no cut back in other areas.

Because yeah, you've literally been told that it's an asset when really you are making a lifestyle purchase and you should have focused on what kind of lifestyle I want and buy a home that can afford you that lifestyle.

Tiffany Grant: Yes. Yes. I'm so glad you brought that up because honestly, like I live very simply, like very simple

Yeah. That's where you should, right? With my house, when I bought my house few years ago, my real estate agent, she was like, You are the easiest person, . [00:13:00] Because it was literally, she was like, Oh, check this one. I came and looked and I was like, Okay, looks good. Let's go . And I only bought it for one 10, so it was very affordable.

Especially, at the time I was like, Oh, I'm gonna be paying less than my rent. And it fit the needs of me and my two boys and. We're still here. So it's I don't need the whole big house. Cuz also that's more cleaning and I don't like to clean , so like I don't need the whole big house.

I can just live very simple. We have enough rooms for us we have enough space for us and it's cool. So I love that you mentioned that you don't have to go big and think about, oh when I resell it and this, that, and the other, cuz when I bought this house I said, Okay. For me, this is gonna be a starter house.

But what I wanted to eventually become is an investment property because I was like, I wanna be able to rent to, maybe another single mom or something like that. Because a lady that. Had it [00:14:00] before me was a single mom too, so I was like, Oh, it'd be cool if, I just kept that tradition going.

So I just knew that this would be something that I would rent out eventually, but I don't know when that eventually is. So I'm like, for us it's . It's cool that we have this, and this is something that I can show my kids like, this is how you build wealth. This is how you start the process. You don't have to go big.

You don't have to, be house poor . You can do something that's small, that's livable, that fits your needs. And this is also how I feel about cars and stuff too. Like as long as it can get me from point A to point B, there's no reason for me to spend an arm and a leg. And so I feel like that is a. A big thing that has helped me throughout my life and, being able to save money and do things like that is because I live very simple.

And at the end of the day, I'm gonna have to be the one living here or driving that car, not everybody else from the outside looking in.

Brighton Gbarazia: [00:15:00] Yeah, it's, You are a hundred percent right and I think we all get, cause like you said, we're just being bombarded with so much. And we're being told, you get to do this and do that.

And sometimes we focus on the wrong thing. And I think the car thing, I used to work for auto underwriting is one thing I did, and this was subprime underwriting just for audience. So there's prime lending, which is usually if you're, again, you see those 0%, usually those are prime lending. And then there's like subprime lining, which is individuals that have credit issues.

And those rates can be anywhere from 15%, all the week's, like 30%. Now you have to understand this where my frustration was just at with this process. So you have individuals who need to get from point A to point B, and then what they do is they buy a depreciated asset, right? A car will depreciate, I don't care what kind of car it is.

There's some car, but let's most cars. Depreciate, right? 95% of 'em depreciate right when you get off the lot if the value's gone down. And on top of that, you're buying a used vehicle that someone's [00:16:00] overpricing what the actual value is and they're charging you 18, 19, 20% on top of that. That's what I mean by it's really important.

Like you were saying, it's just a vehicle to get you from point A to point B, and if it's a depreciating asset, I don't care how much your friends compliment you on how good your truck looks and whatever the point is, you're spending an exorbitant amount of money. For something that's depreciating and literally just gets you from point A to point B.

So a hundred percent. I agree with you Tiffany. It's just I was the same way and my story, the reason I learned that lesson is I had to learn it the hard way. My dad growing up always bought, used cars and I remember as a kid, cuz like we can't immigrate from Nigeria. and he used to think that everyone that had a car like bought it in cash.

Cuz my family came from a system where it was cash based. So when we came to Canada, we would drive around and we had these old like van and then we had a Bonneville, like it was just an old car. My dad always bought, used and I, when I [00:17:00] was driving with my parents in the backseat, I would look at all these other cars and I'm like, wow.

These people must be so rich, look at all these nice cars. And then as I got older I realized you just finance things here. Like you, if you can afford it, you buy it. But that doesn't mean that they're wealthy. My dad was actually the one that was being smart cuz all he needed was a car to drive his family around.

Why would he spend an exorbitant amount of money for someone to just get from point A to point B? And I think a lot of us fall for that chapter. We're trying to keep up with our friends, including me. So my first car experience was me trying to show off to my dad and my parents about it. Hey, here's the immigrant, you've done really good for your son, he's got a good job.

And what do I decide to do? I buy a brand new car. Cause that's what I want to do. I want to show my friends that, Hey, you've done really well. Look at your sound driving, Kia Forte by the way, in my ad. That's right. So it's like I was buying afin like crazy. But the point is that we're all human and sometimes it takes some of these experiences, which is [00:18:00] why tupper with finances, if you've struggled, you've made mistake, don't stop there.

That's okay. Just learn from it. So what I learned from that car experience was like, why would I put $350 a month? That's before we talk about maintenance and all that, into an asset that was gonna depreciate I hadn't at that point understood that concept because I was still thinking that, Oh, this is great.

My family's gonna look really good in front of everyone's eye. And now my parents can be really proud of me. And even if my dad was trying to tell me not to buy the new car and just keep my used car, I wanted to make him proud. I didn't understand the emotional connection that I was driving me towards that car.

So a lot of times when money and white people. So you and I, we've mastered that. Hey, that emotion, we're not great at it, but we, certain things in finance, we can see, hey, this is an emotional trap here. So if you were to try to get me to buy a new vehicle, you are gonna have a hard time because I'm gonna keep telling you like who?

I don't want to be the one paying the depreciated asset, like I want someone else giving [00:19:00] the money. But it takes these experiences for you to figure it out. And you're absolutely right. Keep it simple. It's the same thing with the home owner. Just get the emotion out of it. And I tell clients, Stop watching hdtv.

Stop watching that channel. That's just building emotional traps for you, right? Focus on what your family needs. Get a home you can afford and don't worry about the rest. And over time you will come out ahead, right? .

Tiffany Grant: Absolutely. You dropped so many gems during this episode, and we could go on and on , but Brighton, if people were interested in finding out more about you or following you on social, where would they find you?

Brighton Gbarazia: Yeah, the best place to find me is just go to my website, www. Wealth marathon.com actively now on LinkedIn, and then the future, there'll be more stuff coming out. So just go to website to keep updated so when new stuff comes out, it will be on the website.

Tiffany Grant: Awesome. Thank you so much. And I'll have all of that in the show notes for you all, just in case you're not [00:20:00] writing down information you wanna replay or you're driving or what have you.

All of that will be in the show notes. So thank you so much Brighton, for coming on. This was a pleasure and I loved this conversation.

Brighton Gbarazia: Thanks Tiffany. Thanks for having me on.

Tiffany Grant: Bye.

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