Is real estate investing only for the wealthy? Can you buy it with no money down? Do you have to know the “right” people? These are questions that are commonly asked when talking about real estate investing. It can be tricky when you’re first starting out to know the who, what, and when of it all. Let’s answer some of these questions by looking at some of the myths of real estate.
Real Estate Investing Myths
1. Real estate investing is for the wealthy. Money helps, but it can absolutely be done with little to no money. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple of years until you have enough money for a downpayment – these are some of the ways to start with a little and invest in real estate.
2. “0 down” isn’t possible. “No money down” means none of YOUR money down, and yes, it happens. Although this is an option some people take, it’s within your best interest to look educate yourself on what the possibilities are for you.
3. “0 down” is the best way. If you don’t invest some of your own money, you’ll have higher payments. You’ll also spend more time finding suitable properties, and pay more for them (generally cooperative sellers want more for their cooperation). There are 0-down deals out there but they aren’t always worth doing.
4. You need experience. Experience helps, but you get it by investing. Start with common sense, ask how you can lose money, be willing to learn the numbers, and you can start where you are.
5. Some investors have a “knack” for making money. Sort of. More accurately, some just took the time and risk to learn the market and continue their education.
6. You need to know the “right” people. It helps, so start the process. Talk to investors, real estate agents, landlords, etc.
7. You have to be a great negotiator. If you learn to run the numbers and make the offers based on them, you can be the worst negotiator and still do okay.
8. You need insider knowledge. Understand one deal, and you are on your way. Read and read more, but the best “insider” knowledge comes from experience.
9. Fixer-uppers are safe. People have the idea that doing work themselves is the safest way to assure a profit. Not true. Mis-planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month.
10. The key is lowball offers. The numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate if you understand creative financing – and how to do the math.
When it comes down to it, there are a lot of misconceptions about real estate investing. It’s important to acquire your own knowledge and understand how it can directly impact your situation and finances.