7 COMMON REAL ESTATE INVESTMENT MYTHS

If you are exploring how to invest your capital wisely and make money for yourself, you are probably evaluating various alternatives and weighing the advantages and benefits of each. In this process and in your research, it is essential that you distinguish between the truths and the lies that can be presented around each investment vehicle.

In this post, we list the 7 most frequent myths of real estate investment and explain why they are false beliefs that can distort the true nature of the real estate business.

MYTH 1: It takes a lot of money to buy a property

It’s a common misconception that you can only buy an investment property if you have a lot of money. Despite the fact that a large sum of money is required to get started, there are a number of tactics that can help you get into the real estate market. For example, down payment or initial from 30% of the value of the property, fixed interest rates or not as high as in other countries or states, and opportunity to play in 30 years. On the other hand, with some creativity other strategies can arise such as partnering with another person, financing with private parties, starting with property flipping, looking for cheaper properties that may require remodeling or are in foreclosure.

MYTH 2: Investing in real estate is for professionals only

At first glance, it may seem that the real estate business is very complex, that there are many new terms, that it requires professional preparation or extensive experience to start your investment in real estate. The truth is that preparation is always important and information always brings advantages, but it will not close that door either because you do not have experience or do not know absolutely everything. In principle, it is recommended that you receive advice from agents or brokers, who not only easily manage the dynamics of the business, but are also up-to-date in terms of processes, legal requirements, and market conditions. This will allow you to get to know the sector and begin to become familiar and informed to feel more prepared when making a decision with your investment.

MYTH 3: Making money in real estate is quick and easy

On the contrary, you may think that this type of investment is extremely simple and of quick results, but the truth is that real estate is a long-term investment. Although it all depends on the purchase conditions, the annual return you receive is generally patience and a few years to see your investment recovered. Of course, as in any business, there will be factors that you can control and others that you cannot, that can influence your results and profits.

MYTH 4: Investing in a property is very risky

Although every investment carries a percentage of risk, compared to other investment vehicles, real estate is one of the least volatile. In fact, it is the alternative with greater control over the results, which allows you to protect your capital in unstable economies, obtain a higher return than bank interest rates and build wealth without fluctuations in the stock market, cryptocurrencies, or investment in commodities.

MYTH 5: It should be bought at the lowest cost or in declining markets

This is not entirely true, as there may be properties with opportunity prices but the conditions of the property should be known preferably through an inspection, as it may require major repairs that are more cumbersome or expensive than buying a unit at a higher price. As for buying in a down market, it is also relative, since it is essential to determine the reasons why it is down and to weigh other factors. For example, the value of the rent probably must also be lower than in other areas. Another factor to evaluate is the possibility of revaluation of the property, in case you want to sell it in the medium term.

MYTH 6: House flipping is the easiest way to invest in real estate

House flipping is a popular trend, but it is not always as straightforward as it appears on television. Buying a house for a low price, renovating it, and reselling it for a higher price will almost certainly cost you more money and effort than you anticipated. Imagine detecting that property that is not in optimal condition in an attractive area, it requires an exhaustive and meticulous search. Then there are the expenses of the entire remodeling or repair process that must have been calculated with the best possible accuracy and carried out with professionals who do the job well and in the agreed time. Finally, when putting it back on the market, it must have a promotion and be attractive enough to attract the new owner.

MYTH 7: You must have time to manage your property

Just like you don’t need to be a real estate expert or professional, you don’t need to manage your property. In fact, the ideal is for a specialized company to do it for you. Acquiring an investment property to generate passive income means that you can receive that constant cash flow without involving a complete dedication on your part or that it is the indispensable minimum of your time. The important thing is that you can focus on your business, your job, other investments, or activities while in parallel that unit is producing that constant income. There are companies that specialized in property management or property administration. They are not only in charge of promoting and looking for the most suitable tenant but also serving them in case of emergency or requests on your behalf.

In summary, real estate investment is not highly volatile or risky, its difficulty is relative but it does have aspects that apparently are not entirely true. Thus, the cheapest may not be the most convenient, nor is house flipping as simple as on television. The important thing is that you evaluate the conditions and adjust them to your reality to determine what is the most convenient according to your financial scenario.

Although this does not require being a real estate professional, or having long experience, it is important to have the advice of specialized agents who can provide guidance, keep you updated with the most important information, and can accompany you in making the most important decisions for your investment.