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8 Real Estate Investing Myths Debunked

Misconceptions float around within real estate investing. Many investors begin to believe the common myths in the industry and this can block them from taking action. Believing the myths can cause investors to undermine their potential or completely block some from entering into investing. If you can understand and break through the myths of the real estate industry, you will create more profits, increase your business confidence, and find the rewards that investing offers to those dedicated to pursue it.

Myth #1: Real Estate Investing is TV Like— exactly

When has reality TV ever REALLY modeled reality? HGTV does offer insight into what goes on behind the scenes, it is not able to give the “full picture.” The truth is, reality shows have been helpful and not-so-helpful for real estate. TV has upped the awareness of real estate investing and encouraged many to be involved. In real estate, TV lacks the capabilities of truly uncovering the nitty-gritty details of “investing life.” It doesn’t share how to manage people, find construction crews, or vet and hire a management company. TV just makes it all seem so easy.

Myth #2: Fixing toilets will be your job

Did you know that one of the biggest reasons many shy away from a career as a real estate investor is because they believe they will get stuck fixing toilets? True story, but what’s not true is that actually happening. Yes— many landlords do have responsibilities to ensure that their properties are in working order, but this is not part of every real estate investor’s life. There are ways to invest passively and to avoid the manual labor. Investors can always hire a management company and contractors to take care of necessary parts of business that does not appeal to them. Really, there is no reason why you need to force yourself to do tasks you don’t enjoy. Focus on what you are good at and employ your team to do the rest.

Myth #3: Real estate investing is a get rich scheme

One of the biggest appeals (and fallacies) of real estate investing is that you can make fast and easy money. There is truth that investing in real estate can make money quickly, sometimes faster than anything else, but don’t be fooled that profit will come without putting in the work (and a time commitment on your part). Some people might start in real estate investing and see success quickly, but that could be unsustainable. They need to have a solid business model to translate “overnight” success into long term business stability. Others who begin in real estate investing notice a slower road, and that’s not a bad thing! I’m doing pretty well now, but it took me a couple years to start turning profit.  The most important part is maintaining achievable expectations and creating a business that will last over time.

Myth #4: You need a bunch of money to begin investing

There are real estate investing opportunities that need a significant capital to get started, but that isn’t always the case. You can get into real estate investing with as little as $5000! There are “no money down” options that are available to almost anyone. Don’t simply assume because you don’t have a huge nest egg in the bank to jumpstart your real estate investing career that you have no chance of getting started at all. Do your due diligence and see what works best for you. Speaking from experience, the first deal I purchased happened with no money out of pocket on my end. You can do this too!

Myth #5: Your age will hold you back.

There are so many situations where I still get, “How old are you?” So, I get it. People will judge based on age, but don’t let your age stop you from doing what you want. You don’t need to be a “right age” to get in as a real estate investor. I think that the sooner you start investing, the better. What’s the point of working years and years in a 9 to 5 when that’s really not what you want to do. Let investments help you afford the lifestyle you want and don’t give yourself excuses. Remember— you are never too young or too old.

Myth #6: Raise the rents and tenants will leave.

Among some real estate investors, there is a belief that raising rents will force renters to leave. This is not actually the case. When investors talk this way, what they really are is scared. One time, I bought a property and the current tenant had only been paying $295 a month for over 20 years. The fair market rent on the house was easily $700, which should have been raised throughout the years on the current tenant. If you correctly train tenants with slow increases in rent, raises are not an issue. It’s big jumps that cause renters to balk. It’s important that you know the landlord/tenant laws in your area and what an acceptable yearly rent raise would be. Then make plans to consistently raise rents to be fair, but keep up with inflation.

Myth #7: The income from real estate investing will always be passive

How you make your money in real estate really depends on what approach you take. Many people think that real estate investing ALWAYS allows for passive income to be created. This isn’t necessarily true. As an investor, you will need to treat your real estate investing as a business, and all businesses take work (at some point or often). Most of the people I have paired up with or purchased homes from have found this out through “the school of hard knocks.”

Myth #8: Up is the ONLY way the market can go

It’s true that, over time, real estate has a tendency to go up in value, but don’t be fooled. It can be a ride of ups and downs at times. Even in a down market, there are opportunities to invest in and ways to make money, but make wise choices and investigate your options. And, don’t think that the market won’t go down. Just think about what happened gearing up to the crash of 2008? Many people were shocked, and the crash killed their business. If they had not simply assumed the only way for the market to go was up, they may have strategized differently which would have led to a different outcome.

Summary

Real estate is one of the better ways to create a better quality of life for yourself and family, but be aware of the myths and misconceptions of real estate investing. Don’t let them block you or catch you off guard. If you want to be profitable, break through these myths and take action in a smart and systematic way.