Women Real Estate Investing
Five essential tips for women real estate investors
|Written by Tom Yeung, CFA | CDFA|
Investment Advisor & Fund Manager, Jurnex Financial Advisors
If you’re reading this article, you’re probably a woman looking to invest in real estate. Some people (especially men) might ask how women real estate investing is any different.
To that, I give the same answer as I give to anyone asking why women investing is different: it just is.
Having grown up in a family of women, I’ve seen firsthand the challenges that my mother, aunts, and sisters face in society. Growing up, I saw how my mother worked to manage the properties that supplied her income. It’s NOT that there’s ZERO opportunity. No… discrimination was far more subliminal.
Women face subliminal discrimination in real estate investing
Gender discrimination is both apparent and largely ignored in modern society. It’s the reason why only 18% of investment bankers are women. Or why women are less than half as likely as men to become real estate investors. These are emblematic of why women real estate investing is different.
So in this article, I’d like to share my five top lessons for women real estate investing. These are lessons gathered from my experience as a woman’s financial advisor. Of course, every woman investor is different. But these tips should act as a springboard towards developing YOU as a woman real estate investor. And if you want more information, take a look at 101 Ultimate Guide to Real Estate Investing.
Why women real estate investing?
Firstly, it pays to understand why women’s real estate investing is different.
When a woman buys a real estate property to either rent out for income, or to live in as a primary residence, they’re making a significant financial investment. But what’s the difference between a man and a woman buying real estate? Simple. It’s the way society views women real estate investors.
A study by RealtyTrac found that homes owned by single men appreciate 10% FASTER than homes owned by single women. In part, men have higher incomes, and higher-value homes tend to appreciate faster than lower-value homes. But want another disturbing fact? According to the same study, it turns out women also pay about 15% more for mortgages. That means less money for making improvements and increasing the value of the house.
The #1 thing to understand as a woman real estate investor is that discrimination does matter.
But hear me out. There are great ways that women can overcome these subliminal biases.
Can women make money in real estate?
Let me be clear: YOU can make money in real estate investing. That’s because, with the right investment support, advice and opportunity, ANYONE can make money in real estate.
Not every woman faces difficulties. Some lucky people would have grown up in an environment that encouraged women entrepreneurs, investors, and financial education. But I have yet to see anywhere that gives women perfectly equal opportunities to men. Even in my own family, I saw my sisters get put in the backseat at school and work when it came to learning how to invest.
But that doesn’t mean you can’t make serious money in real estate. I’d recommend you give me a call so that I can share what I’ve learned as a financial advisor and professional investor. But to get started, here are my five tips for women real estate investing
Five tips for women real estate investing
1. Invest for yourself.
When it comes to investing, you need to make the best decision for YOURSELF. I often see women try to anticipate the needs of their spouse, children, or even future children! But this often leads to second-guessing. In other words: analysis paralysis. We become so busy trying to please others that we become scared of action. Who wants to make a wrong investment decision and let their loved ones down?
That’s no way to think! If you’re married and working, chances are you’re earning a pretty decent income. That money can undoubtedly go towards buying a real estate investment. And even if you’re a stay-at-home mom, remember that in virtually all states, you’re still entitled to an equitable portion (if not 50%) of all household earnings.
But if you’re still having trouble getting started, don’t worry. I get it. With so much information out there, it’s hard to know where to begin with women real estate investing. So here are four more tips to help you get started.
2. Don’t be afraid of fixing up a property
In the US, only 3.4% of people in construction are women. The social stigma is so strong that even as a young boy, I knew my mother was fighting an uphill battle when it came to managing her real estate investments.
And the most frustrating thing? Many men don’t realize there’s even a stigma.
But as a real estate investor, you need to get over any fear of fixing up properties. Not only is there a lot of money to be made in fixing up properties, but even regular houses will need maintenance over time. Saying “I don’t like fixing things” is just an excuse that’s holding you back. That’s because even if you aren’t comfortable doing the work yourself, there’s nothing stopping you from learning how to manage contractors who do.
3. Consider multi-family rental properties
Multifamily real estate tends to draw far more men than women. In my experience, that’s because many women often worry about the risks of managing so many tenants. What if one doesn’t pay on time? Or what if you run into a problem tenant?
These are reasonable concerns. As a real estate investor, you WILL eventually run into problem tenants. But that shouldn’t stop you from investing.
Actually, having multiple tenants REDUCES the risk of an investment. Why? That’s because you’re diversifying your revenue stream. Think of it this way: if you rent a house to a single tenant, ANY problem with the rental income can result in ZERO income for the property. That’s bad because you risk falling behind on making mortgage payments.
But now imagine you own property with four apartment units. If one apartment loses a tenant, you still have THREE other sources of income. In other words, you’re still collecting 75% of the total rent. And that’s usually enough to cover the mortgage payments until you can find a replacement tenant.
4. Do the math
It’s easy to fall in love with a real estate investment. But before you pull the trigger, I tell everyone this: do your homework.
By that, I mean that you should run PROJECTIONS and make sure you’re getting a great deal. Even if you’re buying a great property in a great location, you can still run into trouble if you overpay for the property.
Before making the final commitment, I suggest you contact an investment pro to run through the numbers with you. That’s because the couple hundred dollars you’ll spend on a 2-3 hour professional consultation will be well worth the $100,000’s you’re spending on the real estate investment.
But if you want some general guidelines, here are a couple to get you started.
- Guideline 1: Don’t settle for less than 7% cash-on-cash return. To calculate your cash-on-cash return, take your anticipated rental income, subtract all monthly expenses and divide that number by your down payment (i.e., your initial investment). If that number comes to above 7%, you’re looking good.
- Guideline 2: Keep 3-6 months of emergency cash on hand. Your real estate investment might stand empty for a month or two between tenants. Or you might need to make emergency repairs. Regardless of the reason, you should have enough reserve cash to cover emergency expenses.
- Guideline 3: Don’t mortgage more than 4-5x your annual after-tax income. Some lenders will qualify people for mortgages up to 8-9 times their after-tax yearly salary. But just because you CAN doesn’t mean you SHOULD. To keep things manageable, I suggest you start smaller. You can see my article on how much house can I afford to learn more.
- Guideline 4: Don’t chase trends. It’s tempting to buy properties that have gone up a lot in value. But don’t let that be the ONLY reason you buy. An overheated property market could mean an even harder fall. So make sure you’re using all available information as well as your gut to make decisions.
5. Hire an investment pro.
If this seems like a lot of information, don’t worry. The good news is you don’t have to do it alone. That’s because the right investment pro can help you identify a great property and make sure you’re making a good investment.
It also helps to have an excellent real estate agent and mortgage broker. That’s because they can help you find deals on the market. But keep in mind that agents won’t know whether the investment is right for YOU. That’s where an investment pro comes in. These are professionals who can help you manage personal finances as well as examine one-off investments such as real estate.
Where to find more resources
So there you have it. My five essential investment tips for women real estate investing. If you have more questions, feel free to reach out.
And if you’re looking for even more investment tips, you’ve come to the right place.
That’s because I’ve helped invest client money for over a decade in the same old-fashioned way. And that’s to seek out great companies in great industries that can you can buy at a discount to their fair value. Sounds too simple to be true? Give me a call today, and I’ll show you that it’s still possible after all these years.
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