Everyone knows someone who has made a small fortune in real estate. From buying houses and condos to purchasing commercial buildings, there is money to be made in the real estate market. But is it sometimes “too good to be true?” Can you really make a profit buying and selling properties?
Here are a few myths that you have probably heard or read about…and the truth behind them:
Myth #1: You cannot make money in real estate unless you already have money.
This is perhaps the biggest myth out there. While it is true that it “takes money to make money,” you don’t need hundreds of thousands of dollars in the bank to invest in real estate. Instead, careful research and lots of planning will help you to succeed in real estate. Read numerous books on the subject. Talk with friends or acquaintances in the real estate market and listen carefully to their advice.
Myth #2: Start out with small deals, because big ones are too risky.
While you may feel more comfortable starting out small as a real estate investor, there are plenty of success stories from people who “ran with the big dogs” on their very first deal. Again, it takes careful planning and research beforehand.
Myth #3: Anyone can “flip” their way to success and get rich with no money down!
You have surely seen one of those infomercials featuring a giddy couple bragging about how much money they made by “flipping” properties. Some experts caution this approach and compare it to day trading in the stock market — every transaction is a risky one and there are no guarantees that you will make a profit. When you finance one hundred percent of the property cost, you might be paying a higher interest rate than if you had merely put some money down. There are never any guarantees in real estate, so don’t bet the farm, thinking that you can retire after a few transactions.
Myth #4: Some people have the “golden touch” when it comes to real estate.
You may be envious of people you see making a fortune in the real estate market, and you probably think it could never happen to you. “They must just have the ‘golden touch,’” you say to yourself. But the truth is that while those people may have been lucky, odds are they’re just savvy investors. If you learn as much as you can about investing in real estate and plan your next move carefully, you could easily join their ranks.
Myth #5: People who invest in real estate never have to worry.
Unfortunately, this statement is far from true. Everyone who invests their money in anything worries to some degree, but if you listen to common sense and do your homework on every deal before making a move, you’ll feel a lot more confident. Don’t let the worry factor keep you from pursuing potential opportunities.
Myth #6: It takes too much time to make money in real estate.
The one thing that everyone has in common is 24 hours in their day. It’s how you spend this time that makes all the difference in what you accomplish in life. Some people do spend lots of time on their real estate deals, sometimes simply because they have nothing else on their plate. If you really don’t have the time right now, wait a little before taking the plunge. But look closely and realistically at your schedule — chances are the extra time really is there, and you’re giving up a fortune in real estate by convincing yourself otherwise!