Like any other business, real estate investing is dominated by a myriad of myths. Some of them make investing in real estate sound much worse than it actually is (potentially to discourage unwanted competition), while others make it sound much better and easier than it is. Thus, one of the first steps in how to learn real estate is to debunk these myths so that you don’t fall for them as a real estate investor.
1. Real estate investing is too risky
To learn real estate properly and be a successful investor, you first need to discard the myth that investing in real estate is too risky. Naturally, like any other form of investment, real estate carries some risk. However, it is actually the safest kind of investment. Why? Because when you invest in real estate, you buy land and tangible assets which you cannot just lose over a second. Furthermore, real estate markets are much more stable than financial markets. So, don’t let yourself believe the myth that real estate investing is so risky that it is not worth it. To the contrary, with some common sense, basic math and analytical skills, and maybe a bit of luck, you can be a successful real estate investor in no time.
2. You need a ton of cash to invest in real estate
The second myth you should stop believing right now if you want to learn real estate correctly is that you need to sit on piles of cash in order to afford to start a real estate investing business. While it is true that you need to buy an income property to be a real estate investor, you don’t necessarily have to spend a few hundred thousand dollars on it. There are numerous realistic ways to buy a rental property with little or even no money such as trading, wholesaling, lease with the option of buying, borrowing from a private investor, hard money loan, real estate partnerships, etc. So, don’t let “I have no money” be your excuse to not invest in real estate.
3. Now is not the right time to invest in real estate
Another myth to be debunked to learn real estate the right way is that the current moment is not good for investing in real estate. The vast majority of real estate markets have already recovered quite well after the 2008 collapse, and prices are generally steadily going up. This means that now is actually the best moment to buy an investment property as prices are almost certain to be already higher by tomorrow, at least in most markets. So, go ahead and search for your first or next income property through Mashvisor now!
4. Real estate investing is for professionals only
No no no! That’s one of the worst myths in real estate investing, which needs to be debunked immediately. What you need to know to learn real estate is that this kind of investing is for anyone with common sense, basic budgeting skills, and a bit of free time. Real estate professionals are there to help investors in their decisions, but real estate investing is by no means limited only to experts. It is indeed much of learning by doing, so even if you have no prior knowledge in the field, after your first income property, you will be on your way to becoming a professional yourself.
5. All good properties are already taken
Nope, not true. That’s just another myth meant to discourage people from becoming successful real estate investors. And you need to forget it in order to learn real estate properly. Markets are constantly evolving: new properties are being built while old properties are getting sold. It is safe to say that within the US, there is an unlimited supply of potential investment properties. After all, there is no such thing as a good property; it is all about what you make out of a rental property as a real estate investor and a landlord.
6. Real estate investing consumes too much time
Well, it is true that investing in real estate requires some of your time, but that’s not different from any other part-time job, small business, or form of investment. If you want to make money, you will need to devote some time to this, and that’s a basic fact on your way to learn real estate. However, one can argue that real estate investing is one of the most time-efficient money-making methods as you don’t have to work on it every single day, once you’ve found a good income property, prepared it for renting out, and acquired good tenants.
7. There is too much competition in real estate investing
Unsurprisingly, real estate investing is a competitive endeavor, just like any profit-making business. If there is money in a business opportunity, you can’t expect people to not come to it. However, there is so much aggregate supply of potential investment properties (from sellers) and so much demand for rental properties (from tenants) that with some diligent work, you are (nearly) guaranteed to find a successful property for yourself. Remember to learn real estate smartly, and don’t let this myth prevent you from becoming a real estate investor.
8. You must invest in real estate only locally
No, you absolutely must NOT fall for this myth. Learn real estate tidily instead! Be a smart real estate investor by not limiting your options to within the 20-mile radius only. Explore out-of-state real estate investing opportunities too. Especially if you live in an overcrowded or overpriced market, it is obligatory to turn out of state for your income property.
9. Real estate investing means becoming a landlord
In the traditional case – yes, to invest in real estate you need to become a landlord. However, there are actually many options to put your money in real estate without having to deal with property maintenance and with bad tenants yourself. For example, you can hire a professional property manager, who will cost you money but will save you lots of time and headaches. Furthermore, you can choose to invest in a real estate investment trust (REIT), which is very similar to investing in stocks. So, learn real estate well – being an investor does not mean being a landlord.
Related: 8 Steps to Becoming a Landlord
10. You have to buy a home first before buying a rental property
If you think about this myth, you will see there is no logic behind it. If we assume that buying a home costs as much as buying an income property (including the down payment and the monthly mortgage payments), it makes much more sense to buy an investment property first as it will start making money for your right away. And then you can use this money to buy your own home. So, don’t fall for this myth – learn real estate smartly instead.
11. Real estate investing is FAST CASH
Well, unfortunately, we also have to debunk one positive myth about real estate investing. Many believe – or at least want to believe – that investing in real estate will bring you sizeable returns immediately. While this business can definitely help you make a fortune over the years, it is almost certain that you will not become a millionaire within the first year or so. Making money in real estate takes time – that’s one thing you need to know in order to learn real estate properly.
In conclusion, one of the things you will definitely need in order to become a successful real estate investor is to think! And by thinking carefully, you will be able to debunk many of the real estate investing myths – both positive and negative – on your own.