Amongst all investment opportunities available, investing in real estate syndication deals tends to get buyers emotionally attached. As a result, people justify their emotional decisions through myths concerning real estate investing. If you want to avoid getting ensnared in the emotional phases of real estate ventures and make sound decisions, you must identify these myths and dismiss them. This article will list some of these myths and debunk them. They include:
1. You Need a Huge Amount of Capital to Invest in Real Estate
This is one of the most distorted perceptions about investing in real estate. People think that a significant amount of capital is necessary for property investment. Investors do not require a substantial amount or a 20% down payment to invest. Although money can take you places, it is not the only requirement to undertake a successful real estate venture.
If you lack sufficient capital to invest in multifamily property, you can opt for real estate syndication deals. This is where you get into agreement with a group of investors to partner in your investment and share the venture's profits. Alternatively, you can obtain a loan customized to assist first-time real estate investors.
2. Buying Entirely for Tax Benefits (Negative Gear)
Negative gearing is buying a rental property that gives you less income than you spent buying it. Due to this, the negative income is taken as a tax loss that can counterbalance other income with payable tax. Negative gearing hopes that the asset will increase in value eventually, and as it increases, so will its rental income. But, this is not always the case. Do not invest with the notion that running the property at a loss is smart. Rather than focus on the tax benefits, invest in the property while considering its long-term performance and how it suits your cash flow position.
3. It Takes Time to Start Earning in Real Estate
There is indeed no shortcut to making money. However, putting in a little more effort and getting educated about investment prospects can yield significant results. Bear in mind that researching can take months and even longer to know if you made the right decision, but keeping away will not bring in the cash either.
4. All Properties Increase in Value
Another common myth about real estate investment is that the value of properties only goes up. Although this is the case in most situations, it can sometimes plummet as housing and land are not immune to downturns, especially in the short term. When investing, decide if you're in it for the long-term or short-term.
5. There's a Perfect Time to Buy
Most people tend to invest in real estate when the market is thriving. But, when things slow down, they perceive it dangerous to get into real estate. When you have the finances and are ready to invest, do not wait for a perfect time to invest. You should go out and start looking for what you want.
6. Own a Home Before you Invest in Rental Properties
Owning a home does not qualify you to invest in rental property. On the contrary, many millennials invest in rental properties while living in rental homes or with their parents. Investing in rentals can be a great source of income for anyone, not just homeowners.
7. Being a Landlord is too Engaging
Being a full-time landlord depends on your situation, including your commitment, time, and finances. Although being in real estate will require your presence in some areas, it is not always the case. Individual landlords manage most of the rentals in the market instead of professional property managers. Do not allow the delusion that landlords are always busy to prevent you from buying that multifamily property. If you cannot manage it, you can use an investment management platform or outsource it to property managers.
8. Flipping Houses brings in Quick Money
Among the myths about real estate investment is that buying an old property and flipping it will give you quick and easy money. The reality is not as you see it on TV; investing in real estate requires a calculated and careful approach. One thing to keep in mind is to never pay more than 70% of the property's expected value after factoring in repair costs.
If you need help with property management please contact Bottom Line Property Management in NC.