According to the latest research from the National Association of Realtors, home sales declined 4.6% after a steady climb for months on end. However, the market is still hot, with plenty of room for savvy investors.
Have you ever thought about getting into real estate investing but aren’t quite sure where to start? After all, there’s a lot to be lost when you invest in more expensive things such as houses. Fortunately, there are many myths and misconceptions about investing in real estate that may surprise you.
Myth #1: You Need to Be Rich to Start
You may not need as much cash on hand to get started in real estate investing as you think. Perhaps you want to buy fixer-uppers and flip them for a profit. You’ll only need enough money to front the loans to purchase and improve the property.
Yes, you’ll take a bit of a risk if the home doesn’t sell for a while. However, if you do your market research and buy a house for cheap in the right area, you’ll probably sell fairly quickly and get enough return on your investment to fund the next project.
Myth #2: You Have to Be Handy
There are as many types of real estate investing as there are investors. You can buy a space and start renting without knowing anything about electricity, drywall, or heating and cooling systems.
Real estate investors can take on property challenges themselves, hire a property management company, or simply choose commercial real estate investment opportunities that lean less on residential repairs.
Myth #3: You’ll Have Passive Income
Whether you rent homes, sell storage space, or flip and sell, real estate isn’t the passive income gurus say it is. You’ll invest a lot of time and work into building your investing business.
For example, renters will call when something breaks, you’ll have to track them down for late payments and you’ll work to fill empty houses when people move out. You may also have to occasionally evict people, which requires filing paperwork and going to court.
Of course, you can hire a property manager to take some of the burden off. For smaller investors, though, the cost of paying a third-party management firm may eat into profits too much to make the idea feasible.
Myth #4: Property Values Always Go Up
In a perfect world, your property investment would always be worth more when you sell it than it was when you bought it. None of us live in a perfect world, though. Neighborhoods sometimes become less desirable or market shakeups affect your timing.
There’s a reason seasoned real estate investors develop research tactics for predicting performance based on market figures, rural development and other indicators. You are likely to see increased equity if you do your research and buy wisely. However, nothing is promised, so be prepared to sit on an investment until markets turn and values go back up.
Myth #5: You Have to Own Property
When someone mentions real estate investing, you might think the only way to get in is to buy some big-ticket, expensive house or commercial property. However, you can easily invest by putting money into a real estate investment trust (REIT). There are private property and commercial varieties. Some even look at specific niches, such as medical properties.
Start your investment with as little as the amount of a single share. Roll profits into buying more shares and watch your money grow. You may want to diversify, as some REITs make more than others. Some also pay dividends, and you’ll need to decide whether to pull those funds out or roll them back into more shares.
Common Myths About Real Estate Investing
Investing in real estate isn’t something that gets easier the longer you wait. If you think you might like to try your hand at flipping or build something commercial, start talking to others in the industry, as well as your banker and buyer’s agent.
The more you learn, the better prepared you’ll be for your first attempts. Don’t let fear keep you from getting involved. Just be savvy and move forward with the right amount of knowledge to find success.
Comments(2)