5 Real Estate Investing Myths Busted
Before you start any new venture, chances are you’ll seek the advice from trusted friends and family. Well-meaning friends and family who aren’t experienced with real estate investing may give you some advice that’s not all the way true. Some of this advice may be enough to scare you away from getting started. One of the best things you can do as a new investor seeks out an experienced investor as a mentor. Their knowledge and experience will be a great asset as you begin your own real estate investing journey. But until you’ve found a trusted mentor, let us clear up 5 real estate investing myths right now that you may have already heard (and believed).
It’s A “Get Rich Quick” Strategy
Real estate investing is an excellent source of passive income. But it’s as passive as you make it. It requires varying amounts of work up front, depending on which strategy you use. Turnkey real estate investing allows you to basically show up and start collecting rent checks, while other strategies require more effort. You may know investors who just seem to have rent checks rolling in on a regular basis. This is no accident. This is a result of careful planning and a lot of hard work. Real estate can be an extremely lucrative endeavor, but it doesn’t happen overnight. It requires delayed gratification and patience. If you are presented with a real estate investment opportunity that promises overnight success, you are probably dealing with a real estate investing scam. Success in the real estate investment world has been, and always will be, about education and hard work.
You Need A Big Down Payment
Some people believe that to make a lot of money in real estate you have to have a lot of money. This is not the case. In our recent “investing with little or no money down” podcast, we explored all of the different options investors have when it comes to buying property. While there are many reasons to have a substantial down payment, it can be done without one. Having a chunk of money to put down helps reduce payment costs and interest rates, but investors have found ways to be successful without putting down the full 20%. You don’t have to put your real estate dreams on hold for years to save up enough for the recommended down payment.
You Have To Be An Expert DIY-er
Flip to any House Rehab TV show, and you’ll find DIY-ers busting down walls, and single-handedly installing new plumbing or building a second story. Newsflash: You don’t have to be Harry the Home Improvement Guru to be a successful investor. A basic knowledge of home repair and maintenance is helpful, but not required. You can learn as you go. And doing all of the specific rehab jobs is why you hire contractors. If you’re not interested in learning how to lay pipes or fix a garage door or do anything DIY-ish for that matter, the turnkey real estate may be your thing. You don’t know need to know how to do everything in order to do something. If you have a basic understanding of these four skills, you’re already on the road to success:
- Basic Electric- Basically understand how NOT to cause dangerous situations
- Painting- a new coat of paint does wonders to the interior and exterior of a home, if done correctly and with the right tools
- Tiling- Tiling is pretty straightforward but so time-consuming. Many people hire contractors out for this (and pay big bucks for it) because of how much time it takes. If you can perfect the skill, you can get your project finished faster and save money
- Basic Plumbing- Understanding how to NOT flood your property is a big plus
Assemble a solid team of people who can help do the things you can’t. Real estate investing is about trial and error and learning as you go. You don’t have to be an interior designer or professional contractor to flip houses successfully.
It’s Safest To Invest Locally
Some things are hard to do from a distance; like maintaining a long-term relationship or hitting a bull’s eye on a target. But real estate isn’t one of them. The beauty of real estate investing is that you don’t have to pick up your family and move to a better area in order to be successful. You can earn a passive income from a long distance investment. If you don’t live in an area that is conducive to investing, you simply invest somewhere else. You may have to spend some time getting things off of the ground, but once the home is done and tenants are in, you don’t have to be close by all of the time. This is especially true with turnkey real estate since most of the work is already done for you when you buy the home. You could live in Nevada but want to invest in real estate hot spots like Indianapolis, and it’s totally realistic. Your current geographical location does not determine how successful you’ll be in real estate investing.
Perfect Credit Is A Must
Like having advanced maintenance and home repair skills, perfect credit helps in investing but isn’t a deal breaker. If your credit isn’t great, it’s recommended to take steps to improve your credit. While you’re making those changes, however, you can continue to move forward with investing. Finding a hard moneylender is one way to invest with not-so-perfect credit, as well as partnering with someone who has a better score than you do. You can also look into seller financing, private moneylenders and wholesale as you try to invest and bring up your credit score at the same time.
Real estate investing requires a lot of trial and error. It’s about learning from your mistakes and from the mistakes of others. It’s about finding the balance between following your gut and taking the advice of people who’ve been doing this longer than you have. Friends and family will offer plenty of advice when you tell them about your interest in real estate investing. If they start to mention any of these popular myths, you are now armed with the information you need to make an informed decision and move towards a lucrative career as a real estate investor.