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Myths and Truths about Real Estate Investing Every Investor Must Know

Every investment venture has myths and truths, and it’s upon you to do your research to distinguish what is real. If you want financial independence, then start investing in real estate. This sector is a bit challenging for new investors, and that’s where real estate agents come in.

To make a financially sound investment in real estate, you must conduct thorough research about real estate myths and discern which must be recognized and which to dismiss. This article will explore some of the most common real estate myths and truths.

 

Land is Scarce

Most real estate agents and other proponents of real estate will try to coax investors to buy a particular piece of land as its hotcake, letting you believe that you’ll come across such a plot again as land is scarce across the globe. And it is coupled with the fact that there is an increase in population daily. Thus, concluding that the price of land will continue to rise.

Although it’s true land is limited throughout the world, technological advancements are making such that the limited land available is put into maximum use. And studies suggest that even if the population increase, there will still be enough land because there are people dying and others being born, so there will never come a time when the land will not be sufficient. So, the land being scarce is nothing but propaganda.

 

Selling a House by Yourself Saves You Money

When selling your house, you may be tempted to do it yourself to save money since you will not be paying any commission or agent fees. However, many homeowners don’t know that real estate agents have access to an extensive database of buyers. So, when you place your home with them, they will post the house in the MLS, and buyers can be alerted if your house meets their criteria.

However, doing it solo means relying on word of mouth, social media, and signs in your front yard. Remember, there are closing fees and buyer’s agent’s fees, and you may end up paying for the appraisal fees and other repairs after the home inspection.

Also, if you are new, there will be a lot of new real estate vocabulary you don’t understand, and the buying team may sideline you. And this may end up costing you more and taking up most of your time.

So, don’t try to go solo if you are new to real estate investing, have a real estate agent guide you through the whole process.

 

Land Appreciates in Value

Many people invest in land because land appreciates in value. Over the last decade, land prices have increased almost ten times, prompting people to believe that real estate investment will always increase in value.

This cannot be far from the truth because if the economies in developed countries such as the United States and Japan were to experience a market crash, the price of real estate would drop to 40% or more, meaning that the value of your real estate also goes down. So the notion that real estate always appreciates is just a myth as their prices are linked to the economies, which is never a constant.

 

That You Need a Lot Of Money to Start Investing in Real Estate

Many people think they need a lot of money to start investing in real estate, but that is far from the truth. Investing is not the same as homeownership; when you invest, you expect to get returns from the money invested, enabling you to pay back your mortgage or loan over time.

So if you want to invest in real estate, you can look for partners or private money lenders. All in all, every investment is a risk, so you must have contingencies.

 

Buying is Better than Renting

A popular myth is that you must have your own home before investing in real estate. But this is far from the truth, as a survey by Statista found that 38.1% of homeowners in the United States are below 35 years old. This shows that many are investing in real estate while still renting. This is mainly because they want to save for their dream home.

So you’ll find many people owning rental properties and Airbnb, which bring them an excellent income.

 

Buying Fixer Upper is a Quick Way to Get Rich

This is perhaps one of the most common myths circulating in the real estate sector, where investors buy dilapidated houses, fix them and sell them for a profit. The flipping houses TV shows commonly promote this tactic of real estate investing.

Yes, it’s possible to profit by flipping houses, but this is far from a get-rich-quick fix as it requires a careful and calculated plan. Survey the property, calculate the repair and labor cost, and ensure that the amount you pay for the property is not more than 70% cost of repairs. If everything goes to plan, you stand to make about 30% profit.

And if the real estate market crashes, you don’t have to sell the property at a loss; you can hold on to it until the market recovers.

So at the end of it all, you can see that real estate is not it if you want to make fast money.

 

Being a Landlord is Challenging

Yes, owning a rental property is a lot of work, especially if you have hard-headed renters. And you have to ensure that your rental property is in excellent condition, from plumbing and managing books to collecting rent.

However, you don’t have to do everything yourself; you can choose to entrust your house to a property management company to manage your property. But note you’d have to pay them a certain amount. But it’s well worth the cost as you’d be saved from having to follow up with the occupants for rent. The property management company will also ensure that your house is in tip-top condition.

 

Final Thoughts

To start investing in real estate, you must thoroughly research and discern the myths and the truths about real estate investing and real estate agents. This will help you avoid being scammed into buying unworthy properties and also help you develop an eye for identifying properties worth investing in. Also, working with a real estate agent will help you have first-hand information when new investment opportunities arise.


Are you looking to invest in real estate? These are the common myths about real estate investing that every investor must know before venturing into this sector.