Women are often viewed as less likely than men to take the risks required of investors. Whether it is because women have almost always been compensated less than men, or because they are considered less likely than men to stay in the workplace throughout life, women comprise a much smaller number of investors than men. Women also live longer than men; life expectancy for women is 80.4 years compared to 75.2 years for men, according to 2004 statistics from the CDC. That's even more reason for them to focus on investing in their futures.
There is a movement among female investors teaching women that their strengths may not only give them the courage to pursue knowledge and education and invest their money, it will also give them the wherewithal to determine how and where to invest it. With record numbers of women in the workplace, more and more women are asking the question: “How should I invest my money?”
Finding financing can be difficult, but there are several options
Lisa Moren Bromma, an active real estate investor, speaker, author of Wise Women Invest in Real Estate
—among other books—and president of The Entrust Group
, knows what it’s like to ask that very question. A former employee of a Fortune 500 pharmaceutical company, Moren Bromma opted to explore real estate investment after realizing she wanted a greater future for her children. “I had decided that my job could pay for the day to day living, but in order to put my kids through school, I needed to do something that would secure my future in some regard," she said.
A single parent who made good money but not enough to save much, Moren Bromma found a property in Florida with the help of a broker who owned the property and who financed the sale at 12.5 percent. “Interest rates were very high,” she said. “I bought [the house] for $39,000 with $1,000 down and the seller financed the sale at 12.5 percent—he made good money off of me, and it was win-win.” This investment provided capital for financing her future purchases and taught her the value in seller financing.
Moren Bromma said that the greatest burden on female real estate investors
is overcoming the constant fear of worrying about money. “Everyone made it look so easy—mental attitude was a problem,” she said. As a single parent with little to no credit, she struggled to get a conventional loan. Her only option in purchasing property was seller financing
In her first few investments, she said was given the opportunity to build credit because the seller financed part or all of each sale. Most of the sellers she worked with at the time were motivated to get out of the properties they owned, and by showing that she could pay on time each month, she not only slowly built her credit, but lessened her risk as a borrower in the eyes of banks. As she learned to work with tenants, “I found that tenants were not as honest as I thought they would be,” she said. “There were a few instances where I got burned, but I continued to believe in real estate. And still do.”
"For real estate investors, first work with someone with some experience in real estate investing and get your feet wet a bit on your own,” she said. “When...you're concerned that you’re going to be taken advantage of, or that you’ll be perceived as someone who doesn’t have the experience to begin with, it puts you on the negative end," she said.
Women need to approach real estate investing intelligently, with confidence in their own abilities and knowledge, but knowing that in some deals the deck may be stacked against them.
Moren Bromma said women who are just starting out as investors should “get some letters of reference. Letters from a CPA, a banker, a mortgage broker, an attorney—wherever your sphere of influence is—that basically is the introduction to you, the female investor. It’s going to go a long way in making that seller feel comfortable. People like doing business with people they trust.”
The empathy and instinct that women learn to hone can work in their favor as investors|]Women have innate abilities in the forms of intuition and instinct that not only help them choose the right deals, but give them an edge in reasoning with sellers, she said. “Women tend to be empathetic. We’re great listeners, we’re great negotiators. Those are all positive things as real estate investors. But women also tend to get railroaded. Tenants, as an example, can give them a sob story and women will be more empathetic than men will be. Fortunately or unfortunately you have to be a little tougher than that to be successful in the cash flow business.”
As an investor, the advantages of being a woman can outweigh disadvantages
There are many opportunities for women in investing, she said. Whether a person is looking into a real estate investment or a more traditional form of investment, “the investor needs to really know the market they are investing in and really know how to bottom-fish in finding a deal,” Moren Bromma said.
Being a real estate investor is all about perception, she said. “I’ve been through three downturns in the real estate markets—next year will be my 30th year in real estate....I wouldn’t call myself Rockefeller—I've had realistic expectations. I haven’t made this as a full time business. Certainly there are women who have done this and done it successfully.” Moren Bromma said she credits other women, namely Robin Thompson, a well-known investor who has made a business out of rehabbing homes, for inspiring other women to invest.
These days, the advantages of being a woman in the real estate industry can outweigh the disadvantages. For example, Moren Bromma said she believes that because it’s a buyer’s market, motivated sellers are often hurting. Because women tend to be more empathetic, they are more likely to evaluate the best solution by asking open-ended questions, she said.
“When you can solve somebody’s problem, you're going to get the deal, if the deal makes sense to you. Women do a phenomenal job of asking open-ended questions: ‘Tell me a little bit more about the property,’ ‘Gee, that’s too bad, I'm sorry to hear about that situation—how did you arrive at that place?’....That allows other people to talk. By being good listeners [women] are going to get further and further ahead.”
The advantages of being a woman in real estate best serve those who are already in the game. Women who are looking to get started investing must manage the disadvantages of not having education and experience. Moren Bromma said the primary disadvantage to being a female investor is that some women don’t have the knowledge or wherewithal to evaluate the best position for their personality.
“Some people are best as money lenders, and [don’t want to] own the property at all. Others want to own multi-family [properties] because they figure they can make more money...than somebody who is buying one property at a time. You have got to know the different strategies that are out there, and know where your personality fits to make the business work for you.”
Most cities have chapters for different real estate investment groups. An Internet search will bring up local chapter websites and other resources for investors starting out. Many groups don’t just target investors: It’s not uncommon to find service providers involved with lending and construction, as well as potential investors to partner with on projects that may require financing for which investors wouldn’t otherwise qualify.
“If investors can’t cash flow a property, they can find a private partner or use a creative strategy like lease options
to get into a property. [Or] they could do just straight options and sell options.” Moren Bromma said she encouraged women to look to investment clubs for education on these strategies.
“There are about 300 associations in NREIA.org [so investors] can get a pulse of the market. I sit on the board and it’s chock-full of all kinds of educational resources for investors. It is inexpensive, and they will have up-to-date information not only on the pulse of the market but on legislation.”
Women should partner and form groups to share ideas and brainstorm
While real estate investment clubs can provide great benefit to new investors, they also can be places where predatory educators gather, Moren Bromma said. “As far as support in the real estate industry, NARIA
is the only non-profit, investor-related type of association out there. I would urge women to be very careful in whom they elect to give their money to.”
Moren Bromma said she has experienced the difficulties of doing real estate projects on her own. In her books and lectures, she suggests that women create a roadmap for success when approaching real estate investments. Goal setting, she said, is one of the most important steps to creating a solid business plan.
“[Women] should put a business plan or marketing plan or roadmap together. Whatever they need to do to be successful—hire an accountant, a property manager, your financial team, your attorney—have people in place that can assist you so that when you go out to identify and find a deal, nothing will stand in your way to make the deal work. If a woman can do that, and put her roadmap together, she’s going to be very successful in real estate.”
Moren Bromma said women should form their own group of people with whom to brainstorm and share ideas. “Women are great at sharing ideas and working off of each other,” she said.
Learning how to perform due diligence when starting a real estate investment is paramount to an investor's success. “We have four basic values in real estate. Appreciation, tax benefits, income and cash flow
. Always keep those four areas of why an investment is successful in real estate as a roadmap and a plan. Modify it every year, and don’t be afraid to try anything,” Moren Bromma said.
Moren Bromma has a decidedly fresh take on women’s role in the world of alternative investments, which she said is the result of a few risks she has taken and the time she has spent in the classroom.
“I still buy real estate today and have learned a lot along the way and am much more careful. I have made plenty of mistakes, so I still believe that despite the volatility in the real estate market, there is opportunity.” It has been the combination of education, timing and knowledge that has put Moren Bromma in the place she is today.
This is part one of a two-part series featuring Lisa Moren Bromma. This article addresses real estate investment, whereas part two addresses women in business.