Real Estate Investing - Ten Myths
By Steve Gillman - 2010
Is it true real estate investing is only for the wealthy?
Can you buy with 0 down? Do you need to know the "right"
people? Let's take a look at some of the myths of real estate.
1. Real estate is for the wealthy. Of course money helps,
but my first real estate investment was a $3,500 lot - which
I sold for a profit two weeks after I bought it. Small deals,
using partners, low-down deals, or just putting aside $8 per
day for a couple years until you have enough money for a down
payment - these are some of the ways to start with a little and
invest in real estate.
2. "0 down" is near impossible. I sold a rental
property for $1,000 down. I trusted the buyer, and I wanted the
9% interest and higher price. He could have gotten a credit card
cash-advance for another $30 per month and made it a "0-down"
deal. "No money down" simply means none of YOUR money
down, and yes, it happens.
3. "0 down" is the best way to buy. Don't invest
your own money, and you'll have higher payments, spend more time
finding suitable properties, and pay more for them (generally
cooperative sellers want more for their cooperation - I do).
Zero-down deals are out there - they just aren't always worth
doing.
3. Experience is required. You get experience by investing.
Use common sense, ask how you can lose money, be willing to learn
the numbers, and you can start where you are.
4. Certain investors have a "knack" for making money.
Sort of, or some just took the time and risk to learn the market
and continue their education.
5. You have to know the "right" people. It helps,
so start the process by talking to investors, real estate agents,
landlords, etc.
6. You need to be great negotiator. Run the numbers and make
the offers based on them, and you can be the worst negotiator
and still do okay.
8. You need "insider knowledge." You're on your
way as soon as you understand one deal. Read and read some more,
but the best "insider" knowledge comes from experience.
9. Fixer-uppers are safer investments. People have the idea
that doing work themselves is the safest way to assure a profit,
but poorly planned "fix and flips" have bankrupted
even experienced investors. Most poorly purchased rental properties
will only eat a little money every month, not bankrupt you.
10. It's best to make "lowball" offers. It's best
to make sure the numbers work, and to have a plan. You can offer
MORE than market value and make money investing in real estate,
if you understand creative financing - and how to do the math.
Real estate myths are a mix of half-truth and misunderstanding.
They are often pulled out to excuse mistakes due to a lack of
research, or worse, to excuse never getting started. Real estate
is still a great investment - just learn what you need to know.
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