Debunking 3 Common Real Estate Investing Myths

It seems everyone out there has an opinion on how to become successful in real estate investing. Your friends, relatives and co-workers surely have their opinions; These opinions are most definitely crafted by rumors and anomalies made famous by popular media. Don’t let these opinions steer you away from real estate investing! We’ve sifted through the noise to identify and debunk three common Real Estate Myths.

Myth #1: You Need a bunch of Money

No matter what your friends and family tell you, you don’t need a ton of cash to get started in real estate. This is one myth you’ll hear constantly from those who are too afraid, lazy and/or ignorant to try it for themselves. Its an easy excuse that turns many would-be investors away. One of the key attributes of real estate as an investment vehicle is leverage. That is, using Other Peoples’ Money (OPM) to fund your deals.

Leverage, in financial terms, is the concept of borrowing money to purchase an income-generating asset. For example, you might use your own money to fund 5% of the purchase of a multi-family home. However, as the owner of the property, you are in a position to reap the benefit of 100% of that asset’s appreciation.

There are countless institutions and individuals who are looking to lend money to real estate investors. These banks and private lenders understand the power and safety of real estate as a vehicle for long term, high financial returns; They just need someone to do the work. That someone is you. Real Estate has a been a seen as a solid safe investment since the beginning of time. Lenders understand this concept and place value on real estate as an asset class.

If you are able to good real estate deals, the money will follow.

Myth #2: Its Impossible to Invest in Certain Areas of the County

Spend just five minutes perusing the site http://biggerpockets.com/ and it will become shockingly obvious that you can invest in real estate anywhere in this country. Sure, some areas tend to yield higher returns than others; but there is no such thing as a “real estate dead zone”. The key is to determine the appropriate strategy to prosper in the specific market of consideration. Some areas are great for fix and flips, whereas other locations lend themselves toward long term buy and holds.

The good news is that you don’t need to guess at what strategies to try. You will learn that you make your money on the front end of every real estate deal. That is, you make your money when you buy. After performing your financial analysis on a deal (which we will show you how to do in explicit detail), you will know if a deal will work out or not. It only takes analyzing a few dozen deals before you begin to understand the types of deals that will work in your area.

Finally, your real estate investing need not be contained to the market in which you live! There are several strategies that involve finding and executing deals out-of-state. This is certainly an advanced technique…but one that should be given some consideration if you are having trouble in your home town.

Myth #3: Its Easy

Becoming successful in the world of real estate investing is hard work. There are no two ways about it. Regardless of what investing technique(s) you use, it takes time and energy to continuously develop your skills and evolve your business processes. Setting up your business entity, finding properties, analyzing deals, funding deals, managing rehabs, managing tenants, selling properties…all of this takes work! Even if you decide that you will do absolutely no hands on work yourself (construction, property management, etc), you will still need to be actively managing the people who work for you. As with any business, managing people is one of the most difficult skills to learn and develop.

If you think that you will have an easy time making a ton of money in real estate, time for a reality check. You need to be 100% ready for what’s ahead. There will be very bad days. There will be times that you wondered why you got into the real estate world to begin with. The good news is that you will also have good days where you can’t believe it took you so long to get started! For every bad day, there are two or more good days. The number of good days only increases as you gain experience and momentum in your real estate endeavors.

If you’re serious about making money from real estate, get ready to work hard.

How to Fight Through the Noise

If you’re thinking of getting started in real estate investing, you may have mentioned it to your family, friends and colleagues. If so, you undoubtedly have heard some of the myths above and countless other “words of wisdom” on why you shouldn’t get into real estate investing. There is no shortage of people who would like nothing more than to kill your real estate dreams before they get started. Why is that? Is it because they truly dislike you and want you to fail? Of course not! People love to shoot down the dreams of others because they are jealous they are not pursuing their dreams themselves. Do your best to fight through the noise of others who are envious of your drive and determinations. These are the initial hurdles that you’ll need to fight through in order to be successful.