5 Common Real Estate Myths: Busted
By Paul Esajian on July 20, 2017
There is plenty of misinformation out there about the real estate investing business. All it takes is one investor in your area to weave a tale for it to gain traction. Over time some of the biggest misconceptions have become truths, except they really aren’t. The reality is that no two investors are exactly the same. Something that worked, or hasn’t worked, for someone else should be little to no significance to you. What you will find is that you can create your own path regardless of what people around you are telling you. There is value in all the information and feedback you receive but it shouldn’t dictate your business. Sometimes the misconceptions you hear most often turn out not to be true. Here are the five biggest misconceptions you should avoid in your real estate investing business.
- You need money to make money. There is no question that having personal capital is helpful in the real estate business. But, is it a requirement for getting started? No. There are a handful of legitimate ways of finding capital and closing deals today more than ever before. In your investing market right now you can probably find at least three hard money options. Between your real estate agent, attorney and mortgage broker alone there is a good chance you can find the capital you are looking for. There are also plenty of people in your personal network who have an interest in real estate that would love to partner up with you on a deal. These private money lenders provide capital to a deal while you supply your real estate expertise. You may not hit a home run using other people’s money on your first handful of deals but you can still earn while learning the business. Having capital is nice but it is far from necessary.
- Deals will just fall on your lap. Arguably the hardest part of the real estate business is finding deals. With increased competition finding deals has become more difficult. This doesn’t mean they aren’t out there it just means you need to dig in and look for alternative ways to get them. There are many investors who think that they can rely on direct mail marketing or other social media to build their pipeline. These options are effective but nothing is as good as networking. The real estate business is a contact sport. The more contacts you make the easier it is to build a pipeline and find deals. Networking may be something you don’t enjoy and avoid at all cost but it is an essential part of the business. Even if your business isn’t booming you need to show up at local networking events and investing clubs. What you will find is that there are people in your exact shoes looking to grow their business. The more you put yourself out there the more likely you will find good deals.
- You can’t invest part time. Technology has had a huge impact on the real estate business. In the past, if you want to invest you needed to be able to commit full time hours. Today, with the help of technology you can keep your full-time job and invest part time. Technology has made it possible to see a new listing on your laptop or your phone without having to physically drive to the property. Not only can you see a couple pictures but you can watch a video tour giving a true feel of the property. There are also ways of using technology to manage your team and run a project. If you are a rehabber you and your project manager can utilize technology to help you make a quick decision over the phone instead of having to physically be at the property. There are thousands of investors all over the country who have great success only investing on a part time basis.
- Landlording is full of horror stories. Owning a rental property can a pillar in your investing portfolio. Between cash flow and long-term appreciation potential the right property can truly change your financial situation. Instead of focusing on the upside there are many investors who focus on the downside of rentals. They don’t want to deal with difficult tenants and unexpected problems with the property. While there is no getting around the fact that these do happen it is much less likely than you are led to believe. Bad tenants are the exception rather than the norm. There are many more successful leases than evictions. In most cases any problems with the property are a result of poor landlords. Dealing with a difficult tenant can be a challenge but it shouldn’t keep you from buying a rental property.
- Real estate agents don’t want to work with new investors. It can be intimidating trying to find people to work with as you are just starting out. Many investors are intimidated trying to find the right real estate agent because of a lack of experience. There are some agents who don’t want to work with new investors but there are also many who do. Like anyone else in the business you need to find someone who shares your vision and wants to work with you. It may take a dozen people but if you stick with it you can find the right real estate agent regardless of your experience level.
Never take anything you hear as fact without do your own research. Something you thought to be true can turn out to be nothing more than an overexageration or in some cases in downright lie.