Debunking 7 Common Myths About Real Estate Investing

The real estate industry provides multiple opportunities to earn for investors, whether through capital gains, house flipping, monthly rentals, dividends from real estate investment trust (REIT), or property appreciation. However, if you’re new to this realm, it’s easy to just believe what other people say, even the myths and misconceptions. In this article, we’ll debunk some of the most common myths about real estate investing to make you informed decisions about your future investments. You’re welcome!

Myth #1: You have to be a pro to start investing.

Nope. You don’t have to be a real estate broker, realtor, entrepreneur, or sales expert to invest in real estate. You just need to learn more about the property you’d like to invest in, raise some capital, contact some people, fill out some forms, and you’re officially an investor.

Myth #2: It’s riskier than stocks and other types of investment.

Although there’s always a risk involved in investing, it’s not true that investing in real estate is way riskier than in other types of investments just because you can’t always guarantee buyers or tenants, or it’s hard to predict economic recessions that can take a toll on property prices.

Having a property gives you the security of a tangible investment, which means you can always use it as a place to live in or for a rental business. It can also provide unique opportunities to have a passive income in times of economic downturn when many other types of investments would stop paying dividends.

Myth #3: You can get rich fast.

The truth is, many people who became multimillionaires in real estate took some time to get to where they are now. This is because the only profit you’ll get is the difference between the total amount you’ve spent on the property and your gross earnings from it. For example, if you’ve spent $200,000 on a property and $100,000 on additional furniture, and you’ll rent it out for $1,000, it may take you over two years to start getting your return on investment (ROI). If you want a quicker way to earn, try selling properties or do house flipping instead of just renting them out.

For higher returns, it’s also best to wait for the right time to sell a property. Usually, the best time to sell houses is during spring and early summer, when many families relocate or migrate.

Myth #4: Getting a real estate license is the hack to faster ROI.

Getting a real estate license won’t guarantee that you’ll sell a property faster, you’ll get tenants easily, or you’ll get more investors. Real estate is an industry founded on trust and quality connections, which means you could be successful in it through diligence, by having a vast network, and maintaining good relationships.

Myth # 5: You need to invest a lot of money to do it.

It’s not always the case because you can invest in more affordable homes or properties located in less competitive areas. According to Business Insider, some of the cheapest states to buy a home in the U.S. include West Virginia, Arkansas, Alabama, Mississippi, and Oklahoma. Also, the good thing is, it’s much easier to apply for a mortgage from banks and other financial institutions nowadays, so you can always borrow then invest.

Myth #6: You can’t get funding with bad credit.

It could be more challenging to get a mortgage approved from banks and other financial institutions when you have bad credit, but it’s not impossible to get one. For instance, you can opt for a bigger down payment and lower amount of loan. You can also fix your credit by paying for your credit card dues on time, or if you have existing debt, by paying them in full.

You can also explore other options for raising capital. You can try getting into partnerships wherein someone you trust invests the money, while you do the labor and the logistics involved in selling a property. There are also private lenders that do not really look into a borrower’s credit score or income. It’s good to note, though, that this type of loan often has a higher percentage when it comes to interest.

Myth # 7: Timing is key.

The fluctuations in the real estate market are hard to predict, so knowing when to invest is almost impossible, although predictions can be helpful. As a matter of fact, the real best time to invest in real estate is when you’ve already done enough research about it, you’re emotionally and mentally ready to invest, and when you already have the means or a stable source of income to pay for the mortgage or in cash (if you prefer that).

Myth #8: You need to have the perfect property to earn buyers or tenants.

Some people think that they need to find the perfect property (perfect in location, price, demand, etc.) before they can make a sale or get tenants, so they kept looking, thinking they can always find something better. However, what we recommend is to find properties at a lower cost, research their potential demand and property appreciation, and then plan what you want to do about it.

Meanwhile, if you’re planning to sell your home, but you’re not confident with its state, you can always DIY some improvements (paint, interior design, etc.) or ask a professional to help with repairs, redecoration, or refurbishing.

Final Thoughts

These are just some of the many myths and misconceptions about investing in real estate. If you’re aiming to get started, just remember to take the advice of others with a grain of salt, and do your own research. The time you invest in research will also help you discover what could possibly work best based on your investment goals, plans, and preferences.

Finally, if you’re interested in selling your home as soon as possible, we, at Shorefront Investments, buy houses in any condition and in any location without commissions or additional fees. Fill out this form to get an offer today!