Real Estate for the Woman Entrepreneur
Real estate investing is one of the best strategies for anyone looking to build a solid financial portfolio that results in a long-term and extremely viable retirement vehicle.
Typically, the field has been dominated by men, but savvy women entrepreneurs have entered the market and are here to stay. If you find yourself with extra cash, or you can find investors to cover a down payment, real estate could be a very profitable investment for you.
There are numerous reasons this is a good idea for a woman’s financial life cycle. For example, women typically take more time out of the workforce for child rearing than their male counterparts. So, if a woman is out of the workforce for just one year, that can cut her total earnings by 32 percent.
We all know about the continuing and persistent wage gap between men and women. Women earn around 77 cents for each dollar earned by men, which in turn results in a lifetime loss of up to $300,000. Studies show that women spend an average of 15 years out of the workforce altogether, compared to an average of 1.5 years for men.
The bottom line is that in general a woman will have less in her retirement years than a man, and real estate investing is a valuable tool to boost not only retirement income but current income, cash flow and overall net worth.
To some, real estate investing may seem intimidating, but with a little education and a lot of resolve, women can prosper. Mistakes will likely be made, but successful investors learn from their mistakes and improve. You don’t have to be an expert, but you do need to move with caution and do your homework.
If you’re a beginner, it’s a good idea to learn the real estate vocabulary and then talk with other investors. They are usually eager to share their knowledge, including their mistakes, and welcome you to their world. It wouldn’t hurt to join a local real estate investing club, where you can network with other investors, male and female. There are clubs designed specifically for women real estate investors across the country, too.
Educate yourself on the different opportunities that real estate offers, both commercial and residential. Do you want to be a hands-on apartment rental landlord who does all the work, from finding the property to renovating the property to renting the property? Or would you be more comfortable with hiring out one or all of these tasks?
You may be interested in owning a commercial office building instead. You can hire a commercial Realtor to look for a building in your price range, buy it and then hire the realty firm to manage the building for you, from renovation to rentals.
Whatever you decide, you will need to treat your investment like a business, because it is one. Keep it organized and don’t treat it like a hobby. Good bookkeeping is essential, whether you do it or your management company does it. You need an accountant and a lawyer to set you up the right way.
You certainly don’t need to quit your day job to get into real estate investing. For example, if you buy a property that is “cashflowing” right now–meaning that it pays you money each month after it pays its bills–and you hire a management company to manage it, all you need is steady oversight.
Once you build a certain amount of equity, or what the property is worth after the mortgage is paid off, you can take that equity and buy another property, and so on. This is the essential beauty of real estate investing and demonstrates the power of OPM, or using other people’s money to increase your return on investment. For example, if you invest in a commercial building costing $200,000 and your bank mortgages 80 percent of the property’s value, you have invested only $40,000 instead of the full amount that another investment, such as a CD or investment account, would require. If you realize $4,000 annually in net cash flow, your return on investment is 10 percent, presently higher than a typical savings or investment account can promise in today’s environment.
In addition, it’s one of the last investment vehicles that allow you to buy something, such as a building, that someone else, such as your tenants, pays for, all the while gaining you more equity! In addition, you can depreciate the property, which lowers your taxes every year. Furthermore, most good real estate properties increase in value each year by at least three percent, adding icing to the cake.
Real estate investing truly is an entrepreneur’s dream toward financial freedom. And every day, more women who find themselves with extra cash and know-how are taking advantage of this alternative investment approach and breaking through the profit ceiling. ■
Sources: forbes.com, meetup.com and richdad.com.