Real Estate Investment Myths

These 4 Real Estate Investment Myths May Be Why You Aren’t Successful

Real estate investing is a strange business in many ways. While it’s incredibly popular and always growing, there exists a long list of myths and rumors about investing that make it hard for newcomers to get the courage to dive in. Instead of trying to clear up these misconceptions, many investors are content to allow these myths to continue to grow, and it’s easy to believe many of them because they often sound pretty reasonable at first glance.

If you haven’t been having much success with real estate investing, chances are that you’ve been letting one of these four common misconceptions guide your actions. Once you understand that these are totally false crutches hiding a fear of taking a risk, you’ll be able to move on and do what it takes to really succeed in investing.

Myth #1: The best real estate investors are the ones who have all the knowledge.

Real estate investing does require quite a lot of specialized knowledge. There are new and confusing tax laws, contracts, different types of deals, projected profitability, calculated risk factors, ways to identify good properties, marketing techniques, and so much more that go into being a great investor.

But here’s the secret that no one will ever tell you: You don’t have to be the person who knows all of these things. First, the market is constantly evolving, so there is no way to always be 100% in-the-know in every single market. Second, no one person could ever be an expert in all of the areas of knowledge necessary for investing. Instead, learn to surround yourself with people who are experts in specific areas that you can turn to for advice, and you’ll be just as armed with knowledge as any self-professed expert.

Myth #2: The best real estate investors are the ones who have plenty of capital.

This is one of the biggest myths that circulates in the investing world. Many people are under the misconception that in order to invest in real estate, you have to have hundreds of thousands of “extra” money hanging around to invest. Perhaps if you wanted to invest in a high-rise penthouse in New York or a horse ranch in California, you might; but the truth is that real, every-day investing that puts food on the table doesn’t look like that at all.

The bulk of real estate investment happens without really needing large sums of your own money. Investors rely on leverage instead, getting loans which are then paid off after the sale and reinvesting to make bigger profits. In many cases, a much smaller sum is all that is needed to get started.

Myth #3: The best real estate investors are investing in the right area.

Real estate is, after all, all about location. But beginner investors often don’t seem to realize that you don’t have to live in an area to invest in its real estate. Out-of-state investing may seem risky, but if you do the right research and take the time to find a good management company or contractor, the risks are really not any higher than investing in your local area.

When you branch out from your area, which may not be as booming as another market, you open the door for so many more investment opportunities. This also forces you to take a more passive role with management or rehabbing, which is great for those who have found themselves doing more than they wanted to in past investments.

Myth #4: The best real estate investors have more time than I do.

Perhaps because the market is so competitive, or perhaps because of the popularity of home flipping shows, many beginner investors believe that real estate investing is a full-time job. They worry about maintaining their day job, their family life, their other passions and hobbies, or whatever other responsibilities they have, while working towards an investment portfolio.

The truth is that there are many ways to make real estate investing work for your life. You can make it a part of other activities, or simply do it in your free time. No one else can tell you what your path to investment success looks like.