Every investment market has some popular myths about it. And the most exciting myth one can hear is about real estate investments. These myths dissuade many people from trying their hands at it. But everything you hear about real estate investments is not valid. In this article, we’ll talk about Myths and Truths about Real Estate Investing Every Investor Must Know.
Some facts have a logical background, and you must learn about them before entering the market. But you must also know about the fear-driven and illogical myth to avoid unwanted stress. Here we will share some popular myths busted about real estate investments.
Myths and Truths about Real Estate Investing Every Investor Must Know
Capital is essential for real estate investments –
Most people believe real estate investments need a lot of money. And therefore, people with a small budget do not consider investing in real estate. But this idea of real estate investment is not only false but also illogical.
Real estate investments are different from real estate ownership. In real estate investments, you get a profit or return after a period that is helpful for you to pay back your loans and debts. Also, you do not need the capital to invest in real estate. You can get into a partnership or lend money for investment. But always invest calculatedly to avoid market risks.
Real estate investment is full of risk-
No investment is indeed free of risks. But this assumption cannot be valid that real estate investments are full of risks; if so, the business tycoons will never attempt it. The truth is every investment, whether a mutual fund, gold, bank deposit or real estate, has certain risks.
But you can successfully overcome different risk factors when you observe the market before investing and take calculated steps. Today real estate investments have the lowest risk in investment. And you can take guidance from professionals who are new in this field.
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Selling properties on your own is more profitable-
Another popular myth almost everyone has heard is that you can profit more when you sell your properties on your own. For many people involving property selling agencies or agents reduce the profit of property selling. You need to pay commission and agency fees when you take their help.
But in reality, it is the opposite as when you try to sell your property without much knowledge, you can face many difficulties in the work. Also, the agencies have access to an extensive database of buyers that you cannot have. In addition, the overall cost of an appraisal, repair and other stuff will drain a lot of money and time when you try to do it alone.
Buying flipping houses is a quick way to be rich-
Some witty real estate agents craft this myth to clown the newbies in real estate investments. Although buying a flip house as an investment can be profitable. Also, you can earn a good profit by selling them after some renovation work and repairing. You can use different tools like prorated rent calculators or loan amortization schedule calculators.
But if you think this will always bring you profit, you will fool yourself. Many real estate agents try to sell an unworthy house at a high price and share false information about the property. Therefore, you must invest with proper knowledge and experience to avoid this dishonest agent.
Owning a rental property is hectic-
This myth is the most common one would hear about real estate investments. Many people prefer to invest in other real estate properties than rental ones. For them being a landlord and tackling the renters is very tough. They fear handling strong-headed renters and maintenance work.
Yes, you need to keep your rental property presentable and habitable to have renters. Yet there are other ways to do it without troubling yourself. You can hire house management agencies to maintain your house on your behalf. And pay a certain amount of money quarterly or yearly basis.
Land prices only go upwards-
Another bizarre myth popular in the real estate investment market is land investment only upscales the value of the investment. Many people believe that any investment in the real estate sector will not go wrong. This notion results from the current status of the real estate market.
But this is illogical; every investment market depends on the current economy. And if the economy is favorable, the market investment will go up, and if the market crashes, the real estate investments can also face a dip. Therefore, one must observe current market trends are risks before investing in them.
Debt is harmful-
Yes, debt can be harmful to personal loans, credit card debts, car loans etc., but not for real estate and home loans. Taking debt in the form of personal loans or credit cards can be harmful and lead to significant financial loss. But in real estate investments, you can gain good profit from it.
Many large-scale real estate investors earn huge profits from house loans and reach their goals in a short time. But remember, this kind of investment needs lots of skills and knowledge of the real estate business. And, you must focus on significant investments in this sector after knowing about it properly.
There is not enough land-
Another well-versed myth about real estate investment is there is no land to invest in. If this is true, there would not have been so many real estate investors around you.
India is a developing country, and there is a good possibility of real estate investments. The recent news shows that even in the capital cities, lands are being sold and bought. Thus, if you do thorough research, you can find plenty of opportunities for investing.Â
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Goons dominate the real estate industry. The place is for uneducated people-
There was a time when the real estate industry used to look like this. But today, it has no logical background. People from prestigious educational backgrounds like IIM and IIT have entered the real estate business. Many professional courses are also available for people who want to be an investor or a broker.
Real estate myths are the fruit of people’s fear of this industry and lack of knowledge. Knowing the real estate industry and its functionality is essential to breaking those illogical notions.
