5 Real Estate Investing Myths

Posted by Cyron Nikko Alocillo on Sep 24, 2019 9:00:00 AM

5 Real Estate Investing Myths

If you are starting in real estate investing, you'll likely have a lot of questions, such as "how to invest" and "where to invest.” One important thing to do for beginner real estate investors is to steer clear of myths surrounding real estate investing. Here are five common myths to keep in mind:

Myth 1: A Huge Amount of Money is a Requirement to Start

Many people assume you have to shell out a significant amount of money to purchase an investment property. Some real estate investments might, in truth, get very costly. However, you should look around for other ways and opportunities on how you can start as a real estate investor.

Myth 2: Income is Quick and Easy

Many people are drawn to real estate investing thinking they can make fast and easy money from it. While it's true real estate investing can have a tremendous ROI, it critical to be realistic and patient when it comes to expected returns.

For instance, you need to have a viable business model to be successful in real estate investing. There are also times that you have to be patient as you'll potentially wait for buyers of your property

Myth 3: Real Estate is a Passive Investment

You perhaps have heard about the assumption that putting your money on a real estate property is a passive investment. However, the question of whether it's passive investment or not depends on the strategy you take. Real estate investing is still a business, and you have to treat it this way.

Investing in properties requires some work and involvement on your part. For instance, in renting out a property, you will have to take managerial duties. Finding suitable properties for rent, deciding on the ideal rental strategy, and selecting your tenants already needs a lot of work. Moreover, you also have to maintain the property.

Myth 4: The Market Always Goes Up

While it's true that real estate properties generally appreciate, the market can sometimes crash and drag down property prices along with it. In this case, it wouldn't be an ideal time to sell.  On the other hand, buying properties in a down market might be ideal because of the low prices. Therefore, when purchasing and selling properties, you have to look at how the market is faring at the moment.

Myth 5: Owning a Home is Required Before Investing in Rental Properties

A lot of people believe that you have to own a home before you can invest in rental properties. There's no truth in this assumption at all. You can still invest in a property and rent it out while you're renting. The only thing is that you should make sure that you have positive income from the property you rent out. 

You can also purchase a property (say, a duplex) that you have to live in and rent out at the same time. This strategy makes you an owner-occupier. Not only that you're getting the privilege of owning the property, but you also generate income from it.

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Related: What are you and your money waiting for?, Want to sell your property? Rent it out instead.

Topics: Real Estate Investing