Written By Courtney Newton
In 2019, Courtney Newton and Associates are committed to helping more women invest in real estate through flipping and rental properties. As a woman who has found what a great investment and secondary income source real estate can be, I often find that many women are hesitant to want to invest. Instead they trust their savings with mutual funds, IRAs and simple savings—while all of those are a great way to store your savings is it necessarily the best return on that investment? Typically not.
The reason being that real estate is one of the few assets that you can invest in with 100% of the value but 20% of the investment. Real estate purchased for $150,000 can be bought through an investment loan with 20% down or $30,000, can have appreciation on the low end of 2% annually, has someone else paying the cost to service that note, and you are paying down the property at a rate on average of 3-5% annually. This is as much as 7% on the low end return on investment. I like to remind owners of real estate that properties unlike stocks go to zero in value. this is why real estate is a valuable investment for long term investments. So why don’t more women get involved? I believe there are five factors that attribute to why.
Women like security and safety. Regardless of where you are in life: married, single, widowed, divorced or its complicated what we find is women prefer safe. This is to the core of who we are as women. It goes back to the days of cavemen and women. Man go hunt women clean up what is hunted. In a world of recessions, job loss, and life changes it is more and more needed for everyone to have multiple streams of income–including women. I have known women who had no other stream of income than their husbands, and God forbid something happen to him or your relationship with him that would cause that stream to end. Many woman can be put in a position of going back to work, bankruptcy or selling their personal home to survive. By creating another stream of income for your family and for your life can create opportunities. Think of it this way by making smart calculated risks can actually improve your security from a financial sense.
This could be the case and with anything that is worth it you may have to make some changes with your spending and buying habits to save up the money to purchase. I like to say in this factor your future self with thank you. When you force yourself to find money in your budget to set aside for investment property now in 10+ years your future self with thank you for that equity position and cash flow. Many times the house you are living in could be a great property to look at converting to a rental property and upgrading your own personal home. You could also look at some owner financing options, self directed IRAs and other options to buy income producing property. Know your options.
I buy into the belief that what you make time for is what you have time for. So you may not want to deal with day to day tenant management and that is where a great property management company can save you time and money all while still owning an investment. Owning a rental property can be a headache when the work is not done upfront. When you don’t prequalify the tenant or verify rental history, sign a quality lease with clear expectations, or any other number of factors can cause the tenant landlord relationship to be strained. The right property manager can significantly reduce those headaches.
As someone who owns many rental properties, I can assure there is nothing I have ever done besides the occasion cleaning, light painting and purchase pick up at Home Depot. I also have an extensive list of quality contractors, handymen and mechanical contractors that I use to help keep my properties safe and maintained. That is the key to work with people who wont take advantage and are fair in their pricing. I recommend these contractors over and over to clients and the client knows that they are reputable and fair. Repairs happen as part of owning any property but there is no rule that says you must do the repairs just that they must be done. Understanding how the repair is done or what specifically needs to be done isn’t necessary just what would be a reasonable fix and cost is.
This is a common misconception that all the good rentals are already taken or by the time they would get to me they are junk. This is where establishing criteria in what you are looking for matter. Buying a rental property is a logical process you are looking at it from the standpoint of does this meet my criteria? If it doesn’t then move on plain and simple. First and foremost you must create your list of criteria. This will include budget, area, bedrooms, baths, yard size, condition.
You are looking for a property that will match what you want to take on and be a property you feel comfortable owning. Buying something in an area you have no knowledge of, or would not feel comfortable visiting is not a place for your money. Buy somewhere you would have lived or would put a member of your family in. Don’t buy a property because someone says it is a good deal, that is the beginning of slippery slope and could cause you to make a risky investment. Buy a property that you would be proud to have in your portfolio. Just like you wouldn’t buy a stock that have ethical or human right violations you wouldn’t buy a property that would deem you a slumlord.
Investing in real estate is a great way to build wealth. More women should be involved in the process because we find woman make great landlords. To find out more about investing in real estate as a woman attend our monthly Women in Investing Series at Courtney Newton and Associates.