When it comes to real estate investing, there’s no shortage of opinions. When you decided to start investing in real estate, you probably received plenty of unsolicited “advice” from family, friends, and even strangers cautioning you about it.
There are many myths you’ll hear. Here are 4 myths you probably heard and the actual truth you need to believe instead:
Myth #1: You need a lot of money to be a real estate investor
Of course this isn’t true. If you are using your own money, you need a down payment and enough room in your credit score to acquire another mortgage, which is viable for investors who are determined. Or, of course, you can use other people’s money – from private lenders to lines of credit to seller financing; there are so many strategies. Most unsolicited advice come from people who have zero personal experience (or maybe a single negative experience years ago) and they’re just parroting what they’ve been told.
Myth #2: You’re asking for tenant headaches
There will always be challenges in real estate investing and certainly tenants are an area that could provide challenge. However, carefully vetted tenants in a property that is well managed and taken care of can provide plenty of long-term cash flow with few headaches. The key here is “well managed” because a good property manager can minimize most of your tenant headaches anyway. Besides, most investors are smart enough to realize that the occasional tenant headache is far outweighed by the positive cash flow of a property.
Myth #3: It’s a terrible time to buy a property
All that well-meaning-but-unsolicited advice often comes from people who view your real estate investing through the lens of their home ownership. It might seem to them to be a terrible time to buy a home for home ownership but real estate investors approach an investment property very differently: They’re not looking at appreciation but at the bigger cash flow picture instead.
Myth #4: If you don’t buy in your market, you must be a slumlord
This infuriating myth stems from a false dichotomy formed in the minds of people who have never invested before: they come to believe that the only properties worth investing are the ones near where you live while anything else outside of your market must be worse. Of course nothing is further from the truth and, in fact, investing outside of your market gives you a greater advantage of more opportunities (plus it forces you to put a good property manager in place).