4 Biggest Myths That People Have About Property Markets

The number one rule of Real Estate Investing is "Location! Location! Location!"

 Whether or not your property will make money has almost everything to do with its location.

Let’s take a moment to talk about the 4 biggest myths that people have about property markets that keep them from profiting:

Myth #1- You have to invest where you live

Truth: You can invest wherever the numbers make sense (and they may not make sense where you live).

This is a myth that I used to believe wholeheartedly. My husband and I live in Los Angeles, one of the most expensive markets in the U.S., and we were looking to buy a multi-unit property that we could buy and hold.

We searched and searched in and around Los Angeles but could barely find anything that we could afford to buy, or if we could afford it would make us any money.

I got very frustrated until I met Robert Helms, host of the Real Estate Guys Radio podcast and radio show, and he shared this quote with me: “Live where you want to live. Invest where the numbers make sense.”

I had never before considered investing outside of where I lived and could easily drive.

Hearing him say that to me was a big paradigm shift. It literally opened up the entire world to my real estate portfolio. If we found the right market with the right numbers, we could invest anywhere.

Dear reader, I want you to remember this maxim too: Live where you want to live, invest where the numbers make sense.

Myth #2- You have to buy a place that you'd want to live in.

Truth: The best investment opportunities are often in areas where you wouldn't want to live.

Again, it comes down to “live where you want to live, invest where the numbers make sense.” I want to live in a large 6-bedroom house overlooking the ocean in Santa Monica, CA, but I would not buy such a place as an investment property.

Buying such a property, would not make sense for my investment goals of 10 percent yearly cash-on-cash return. If I were to buy such a place and try to rent it, chances are I would not be able to rent it out for enough money to profit on it at all.

For me, I’d rather purchase in markets that have all the factors of a great market and are in a lower-to-middle-income neighborhood.

These may not be in the best parts of town, so I probably wouldn’t choose to move my family there. However, these are areas with lots of renters and where my investment dollar will likely go the farthest.

Myth #3- Being in a good city is enough.

Truth: You need to be in the right submarket - sometimes success can be the difference of a block.

Let’s start with an example: Let’s say that you are considering buying rental property in Dallas, Texas. You did your homework and concluded that Dallas is the right market for you. Now, it’s time to buy anything you can get your hands on, right? Stop! Wrong!

Knowing Dallas meets your investment criteria is a great start, but that alone does not mean that all the neighborhoods in Dallas are appropriate locations for you to purchase and own investment properties.

You must find the right submarket, because being on the “wrong side of the tracks” can be the difference between success and failure.

When people are deciding where to rent, they consider the same things that you probably considered before your last move: school district, crime in the area, proximity to major employers, proximity to public transportation, proximity to shops, restaurants, and other areas of interest, etc. You must consider these same things to ultimately purchase a rental property that will attract good, reliable renters.

Just because any city “as a whole” is a good city for investors, it doesn’t mean that every neighborhood within it will be a good fit for you to invest in.

Sometimes, the difference between success and failure can be even smaller than neighborhood by neighborhood. Sometimes a particular street can make the difference.

You’ll want to learn the market and the submarkets well to make the best investment decision possible.

Myth #4- You can learn everything you need to know by researching online.

Truth: Usually it will take you to get your boots on the ground or the boots of someone very trustworthy on the ground before you can make an educated decision.

You can find a lot of information about a market online: population rates, new employers coming to town, population demographics, etc., but there are certain things that you will only know by being there.

When you visit a location, you will get a feel for the market and the people. You will also be able to meet with and talk to your team and drive the neighborhoods and streets. You can see a lot from Google Earth, but you might not be able to see how far that public transportation is or that there is a homeless encampment in the alley behind the property you’re interested in.

If you are not able to visit your market, you must have someone you really trust, both in terms of their integrity and their judgment, to make an educated assessment to visit for you. Sometimes your property management company can visit for you.

These properties will likely be the biggest financial investment you make in your life, so it will behoove you to see them yourself if at all possible.

Let’s say it again: “Live where you want to live. Invest where the numbers make sense.”

About Monick Halm

Monick Halm, founder of Real Estate Investor Goddesses, is an educator and advocate for female real estate investors, Her mission is to help 1 million women achieve financial freedom through real estate investing. To find out more about Monick and connect with her, go to www.reigoddesses.com.