The age-old fear of the unknown scares many people away from investing in real estate. Although a wealth of information on property investment is readily available, persistent myths are blocking people from this opportunity. Once you move past these misunderstandings, you can become empowered to grow your own real estate portfolio.
Myth 1: Real estate investing requires large amounts of cash
You can more easily start out with smaller properties like townhouses or duplexes. Once you start earning income from these, you will have more capital to finance larger projects. You do not need a huge pile of savings to begin, either. Consider tapping into the equity in your home to obtain extra money and a tax advantage.
Myth 2: You should buy property for negative income
Some advise investors to purchase property that generates higher costs than income so that the negative income offsets other taxable income. However, investing with the intention of holding an asset at a loss is not wise. It is best to purchase property for growth over time in spite of any short-term losses.
Myth 3: It will take too long to learn about it
Real estate investing is certainly not a get-rich-quick scheme; it does require that you educate yourself. While this can take several months or even years, the time will pass whether or not you dedicate it to learning.
Myth 4: Property values always appreciate
Real estate does tend to appreciate over time, but it has its ups and downs just like the stock market. Consider your time horizon for investing, costs of acquisition, maintenance, and upgrading, and expected income. Study the location of prospective investments to assess the potential for growth.
Myth 5: There are no cheap properties available
Prepare yourself financially so you can take advantage of an opportunity right away. However, be cautious before buying a “bargain;” seek expert opinion to assess whether it is a deal or a dud. You want to put your money into something that will pay you, not continually cost you, later.
Myth 6: You should only purchase property in familiar areas
Properties perform at different levels across countries, states, and cities. The value of a property in one neighborhood can be significantly less or more than another property within the same area. It is not so important that you can see the property you invest in; you want to see the highest returns on your investment.
Real estate investing is a time-tested way to create income. Many people forgo it because of inaccurate assumptions. Talk with a qualified property investment adviser to help you dispel these myths and discover the rewarding possibilities that await you.