Real Estate Investing- the 6 Myths That Will Kill Your Chances of Succeeding

Posted on March 2, 2010
Filed Under Real Estate Investing |

In every business and every industry there are people who just seem to drip with success. They seem to know all the right people, make all the right decisions, be in all the right places at exactly the right time. They seem destined for success whether they even try or not. Real estate investing is no different. In every city or town, there seem to be real estate tycoons that struck it rich through real estate.

 

In this article we will bust myths that will hold you back if you buy into them.

 

Myth #1: You have to have a large sum of money to invest in real estate. They think it is like saving for their first home or that it’s something they can only do once they have made their fortune elsewhere. Both of these thoughts couldn’t be further from the truth. You don’t need hundreds of thousands of dollars in the bank to invest in real estate and you certainly don’t need millions. All you need is a good real estate deal that makes sense and one that has profit potential and is based on solid financials.

 

Myth #2: You Need to Start Small-Big Deals Are Too Risky. There is nothing wrong with starting small, but why rule out a $2 million, fifty-unit building? Mortgages on smaller properties like single-family homes are almost always guaranteed through the buyer’s own personal earning potential and wealth. You may be surprised to learn that larger investment property loans are secured by the asset itself. In other words, instead of the $2 million building riding on your own wealth, it is riding on its own valuation. This is less risk to you.

 

Myth #3: You can “Flip” Your Way to Success or Get Rich Quick with No Money Down. Many people think that flipping property is the way to grow wealth. The people who believe strongly in this have been lucky enough to make money this way. In my opinion, this is like day trading in the stock market. It isn’t easy, and it is very risky. No money down is another way of saying that the property is 100% financed. That means a much larger part, if not all, of your cash flow is going toward the monthly payment. In no-money-down deals, you’ll be paying higher interest rates becuase there is greater risk to the lender, have higher loan costs, and have virtually no money to improve the property or even repair it should something break. With this model, you are banking on the property appreciating to make money rather than improving the operations of the property and making money through cash flow.

 

Myth #4: You Don’t Have Time. This really comes down to choices and priorities. There is always time to do the things we need to do like go to work every day, mow the lawn, feed the dog. Often there isn’t time to do the things we really want to do. Learn to speak a second language, build a bookcase, or volunteer in the community. There is a difference between need and want. The investment real estate business is something you should want to do and may even need to do. It’s work. To be truly successful, especially in the beginning, you will be involved in the day-to-day activities of finding and evaluating property, negotiating deals, or overseeing contract repair work.

 

Myth #5: You Have to Know Somebody to Get Going in This Business. While knowing a few key people such as a real estate agent, an attorney, or a banker may save you some time, you don’t need to know anyone even remotely connected with investment real estate to get started.

 

Myth #6: You Have to Know a Lot About Real Estate. This myth holds people back every single day. They feel they have to already be experts in a field in order to be successful. Success is a journey, it’s not a destination, and all successful people start at the same place. We gain expertise through experience. On your first deal you’ll learn a ton and even more from your second and third.

Shawn L Charles
http://www.articlesbase.com/real-estate-articles/real-estate-investing-the-6-myths-that-will-kill-your-chances-of-succeeding-686596.html

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