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Debunking the Most Common Real Estate Investing Myths That Exist Today

Debunking the Most Common Real Estate Investing Myths That Exist Today

Did you know that home sales in the United States were higher in 2020 than in any year since 2006? Real estate investing is a great way to build wealth and diversify your investments. There are many things that go into being a smart investor and one of those things is finding the truth behind the myths that come with investment properties.

There are a number of unfortunate myths when it comes to the real estate market and investing in income generating properties. These rental properties will provide you with steady cash flow and passive income. If you’re unsure of whether or not you should get started in real estate investing then you’ve come to the perfect place.

Keep reading this article to learn more about the myths surrounding the real estate market and investment properties today.

Fixer-Uppers Are a Quick Route to Wealth

It is true that you can make a nice living by fixing homes up and then selling them for much more than what you paid. The TV shows that are based around this part of the real estate market don’t help when it comes to this myth. It is possible to make a profit from fixing homes up and flipping them but it is far from easy.

You need to put together a calculated approach to picking the properties that you want to buy and what you’ll need to do in order to increase their value. This means running the numbers and ensuring that you’re making enough of a profit that it is worth the time and effort involved. A good rule of thumb is to spend less than 70 percent of what you hope the home will sell for when you’re done with it.

This changes if you’re investing in a fixer-upper that you’ll use as a rental property. You’ll be more immune to changes in the real estate market and you’ll have a steady cash flow coming in each month from the money your tenants pay in order to live there.

Focus Your Real Estate Investing Close to Home

Another common myth when it comes to real estate investing is that you should try to find homes or properties that are near where you live. The theory behind this myth is that it makes it easier to understand the area and the market. While that is nice, this is a myth for a reason.

This is sometimes a good strategy for your first investment property when you’re still figuring everything out. It is also a good strategy if you plan to manage and oversee the property on your own rather than going with a property manager.

The issues start to arise when you move towards growing your portfolio. You’ll need to find properties that are valuable in other markets besides the ones near your home. When you start growing your portfolio you’ll find it much easier to use your cash flow to pay for property managers that will allow you to have peace of mind and live wherever you want.

Being a Landlord Is Hard

Some personalities are better suited to being a landlord than others, but there is a myth that it is difficult to be a landlord. This is far from the truth. Don’t be scared off from investing in real estate and income generating properties for fear that being a landlord will take up any and all of your free time.

Being a landlord is time-consuming but it isn’t unmanageable. It is a bad idea to try to take on property management all by yourself. This is especially true if it is your first time managing a property. There is a lot that goes into it and it can seem intimidating at first. Consider hiring someone to help you manage the property and show you the ropes, like those at workforce housing.

You Need to Be Wealthy to Start

Another common myth about investing in real estate is that you need to have a good chunk of wealth before you can even think about getting started. This is also not true. Having wealth makes the path to investing in income generating properties easier and it makes investing less risky, but you don’t need wealth to play the game.

Unlimited funds would make real estate investing much easier, but realistically all you need to do is contact banks to get an idea of the loans you’ll qualify for and have the money to put 20 percent down on the home or property. There are even options that require you to put only 3.5 percent down like a First Time Homeowners Loan.

Real Estate Investing Is Risky

You’ll probably experience people telling you that investing in real estate is risky and that you shouldn’t do it. They’ve fallen for a common myth that prevents people from growing their wealth and gaining financial freedom. You could make a case that income generating properties are a safer investment than anything on the stock market.

People will always need a place to live and that is what you’ll own when you invest in the real estate market. There are a number of things that you can and should do to mitigate the risk of investing in a home or property. It is a tangible investment that, if worse comes to worst, is a place to live for free.

If you opt to rent it out then you also have a source of passive income that results in money going back into your pockets. This money could get used to travel, pay off student loans, or you can invest it in new properties.

Start Your Real Estate Investing Career Today

Real estate investing is surrounded by a number of myths that will keep you from giving it a proper try. It is less risky than investing in the stock market and it can lead to big returns or a steady cash flow from collecting rents. Best of all, you don’t need to be a wealthy person in order to get started.

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