Real Estate Investing: 7 Myths That Absolutely Must be Busted
I’m a fan of the TV show Mythbusters. Have you seen it?
Two guys and their assistants put common myths and urban legends to the test. On the show they test rumors, myths, and popular beliefs. The test produces one of three outcomes: confirmed, plausible, or busted. According to wikipedia some of the myths they have tested include:
- Can the unaided human voice shatter glass? ("Breaking Glass") (plausible)
- Can a penny dropped from a tall building kill a person at ground level? ("Penny Drop") (busted)
- Does a duck's quack echo? ("Duck Quack") (confirmed)
- Can diving underwater protect a person from gunfire? ("Bulletproof Water") (confirmed)
- Is it possible to break off a lock by shooting it with a gun? ("Mega Movie Myths")
Imagine a show called “Real Estate Investing Mythbusters”. Here are some very common myths that keep some people from enjoying investing success.
Myth #1 - It takes money to make money in real estate.
One seasoned investor said, “If you can’t make money in real estate without money, you probably won’t make money in real estate with money.”
You can buy property with zero down. You just need to learn how. That is a strategy, and strategies can be learned. You might not even use it, but you will probably want to at some point.
If you find a good deal, it will be easy to find someone to partner with you on that deal. You can use other people’s money to make money for yourself. Again, the key point here is that this is something you can learn.
Every day people are making money in real estate with no contribution of their own. Find a good deal and the money will find you.
Myth #2 – Real estate investing is too complicated.
If it were too complicated nobody would be doing it. It can be as simple or as complicated as your choose to make it.
The fact is, most people think real estate investing is a lot more complicated than it is. If you already own a home then you know a lot about buying real estate. Has your home been a good investment for you? It probably has.
What would happen if you bought another home and found a tenant whose rent payment covered your expenses? If you held that home for 10 years it would probably more than double in value. Does that really sound too complicated?
People have a tendency to think that real estate investing is more complicated that it really is.
Myth #3 – I don’t have enough time to be successful.
I read recently that over our lifetime we spend about 100 hours tying our shoes. Do you need more time? Try wearing loafers instead of lace-ups.
The last time I looked we all have 24 hours in a day. Most Americans spend several hours a day just watching TV. If you really wanted to, could you carve out an hour a day to learn about investing?
Yes, investing in real estate will take time.
How quickly do you want to achieve financial independence? The more time you can devote to your investing career, the quicker you will reach your goals.
Don’t make the mistake of thinking you’ll start out needing to invest 20 hours a week. Far from it. If you will devote an hour or two each day to learning, practicing, and taking action, you will soon achieve great success!
Myth #4 – Real Estate investing is risky.
Real estate is probably the safest investment you could make. If you put your money in the stock market, which most people do, how safe is that? Will those companies be around 50 years from now? Real estate doesn’t disappear, companies do.
It’s amazing to me that people blindly put money in the stock market and mutual funds year after year. They never read a company’s financial report, but simply trust that the market will go up. And, over time it may.
Real estate is less of a risk. You can see it. You can touch it. You can improve it. You control it personally. You can know your local market and tell which way it’s moving. Plus, real estate is very forgiving. If you hold it long enough, it will make you money.
Myth #5 – There are already too many investors in my area.
When you attend the local real estate investors club you might meet scores of other investors. You might be tempted to think, “How will I ever find a deal with this many investors out there looking too.”
In reality, most of those people aren’t true investors. They are just “go to meeting” people. They like the idea of real estate investing, but they never take action.
Right now in my market there are over 5,000 homes listed in the Multiple Listing Service. There are hundreds of for-sale-by-owners. There are probably hundreds more who just today are thinking about selling.
This probably comes out to hundreds of homes per investor. In reality there are plenty of deals out there for the serious investor.
Investor Dolf DeRoos like to say, “The deal of the decade comes around about once a week.” If you are constantly looking for a good deal, it will find you.
Myth #6 – It won’t work where I live.
If you truly believe that real estate won’t work for you, you’re right. But right now, today, someone else is making it work for them in your town.
Knowledgeable investors know how to make money in a seller’s market. They know how to make money in a buyer’s market too. Whether the market is up or down, they know what strategies to use.
You can learn those strategies too. You may have to study the market, learn market values, rental rates, rehabbing costs, and marketing. It will all work if you will.
Myth #7 – I don’t know how to get started
You probably already know enough to get started in real estate investing. You simply need a little guidance. You need a nudge. Let this be your nudge.
Don’t make the mistake of thinking you have to know everything before you get started. No one knows everything about real estate investing….even Donald Trump. Trying to learn it all will surely gum up your brain.
You simply need to decide upon a direction and take simple steps along the way. You can learn what you need to learn. You can learn it quickly. Within the next 60 days you can own your first property.
Myth busted!