Top 7 Real Estate Investing Myths
Real estate has been one of the favorite options for investors for years. One of the many reasons for this popularity is real estate investing myths.
However, to become a successful real estate investor, it is a good idea to learn the most popular myths and not let them negatively impact your career. It is the same method bettors use when they find betting tips ipl before they start betting on cricket, it gives them a head start.
The land is scarce and therefore precious
This myth is based on the logic that since there is a limited amount of land on the planet and the number of people is increasing, the price of the land will always go up.
However, there are two main problems with this approach to real estate investing. The first problem is the fact that studies show that the number of people on the planet can increase four times and there would still be enough land for them to live.
The second reason is the fact that with the advancements in technology people are finding new ways to efficiently use space and land. As a result, modern settlements can now house much more people than was possible 50 years ago.
The land always goes up in value
This way of thinking is very common in largely undeveloped countries some 20 to 30 years ago. Since these countries were going through the stage of economic development for the last two decades, the price of real estate has been going up.
If we take into consideration developed regions and countries, we can see that this is not true. For example, in the USA, prices of real estate have dropped several times in the past thanks to different economic circumstances.
Past predicts future
Investors tend to use past performances of real estate to create models for future performance. This can be very tricky and risky for the simple fact that in the past 50 years, there were multiple factors, like globalization, that had a positive impact on the price of land.
This kind of development will hardly happen again and thus the price of real estate will not be impacted by the same factors as in the past.
Flipping real estate can be easy
This myth has lost a lot of its followers but it is still present in the real estate industry. Its origins can be found in the stories of millionaires that made their fortune from buying and selling properties.
One of the things that are not often mentioned is the fact that there is a lot of hierocracy and fees that accompany this process. In fact, in countries like the US, fees for these kinds of transactions can be anywhere from 3 to 5 percent.
The other factor is the fact that there are now big real estate agencies that rule this industry, it is very hard for someone that is new to make its name and money.
It is better to buy than to rent
This opinion is mostly based on the security that property gives to its owner thanks to the sense of ownership. Applying this approach to every situation and every piece of real estate is not a good idea because it is not always the right way.
There are of course come instances in which it is better to buy than to rent but also there are situations in which it is much better to rent a property and wait for a better opportunity.
You need a lot of money to make real estate investments
This is one of the most widespread real estate myths which keeps a lot of people from entering this industry in the first place. Although, if you are on a limited budget, you will have to be more creative and invest more time than those that have a bigger budget.
Along with this, there is also a high chance that you will have to make some adjustments to the property that will make it more valuable.
Real estate is risky because it is not a liquid investment
It is true that real estate is not as liquid as bonds, but with good planning and smart investments, you can still mitigate most of the problems that come with the lack of liquidity.
One of the approaches that investors use to mitigate this problem is flipping houses. This pretty much depreciates the issue.
As you can see, the real estate business is one of the most popular for new investors, but it is also full of myths that paint the wrong picture. We hope this text debunked at least a few myths that you heard and as a result will help you make better decisions