Amongst all investment options available, real estate is the one that buyers tend to get emotionally attached with. For this reason, people rationalize their emotional decisions with the help of many myths about real estate investing.
If one wants to avoid getting entangled in the emotional aspects of real estate investing and make financially sound decisions, it is imperative that these real estate myths be recognized and dismissed.
MYTH #1: You need your own cash or credit to invest in real estate.
WRONG! You can start as a broker for sellers.
Simply stated, you are buying properties at a discount and selling properties at a discount. More specifically, you are taking control of the properties.
- It’s not fixing and flipping.
- It is finding opportunity in properties and presenting them to buyers.
Of course, there is something you need to do that helps you find sellers and buyers.
You have to develop your list of leads, which is not brain surgery. There are lots of low- and no-cost ways to generate leads. That goes for buyers, sellers AND investors.
You do NOT need your own cash or credit to invest in real estate. You do need knowledge and time, however. And you need leads. All that means is that you need to learn a thing or two. And that’s not tough.
MYTH #2: I can’t be looked at as the “local expert” in real estate investing.
Really? Why not?
It’s a myth to think that you can’t develop the skills necessary to talk to people about real estate investing. Like everything, it takes practice.
Once you learn what you are doing and can talk to other people about it, guess what? You will be looked at as the local expert. That opens all sorts of opportunities to you.
For one, you can find investors for your deals.
You CAN become a local expert in real estate investing. It just takes the right steps and tools.
MYTH #3: Real estate investing is only for the wealthy.
No matter how much money you do or do not have in the bank, no matter what your credit score looks like, no matter if you have credit cards or not… or any assets for that matter, you CAN invest in real estate.
- Probably start as a broker.
- You might start as a fix-and-flip.
- Or you might just go for the gold and jump into investing in rental properties.
The point is that you can set a goal and get there time and time again, even if you don’t have money, credit, a good credit score or even a job.
It is your knowledge and time you will leverage in your deals; it is the investors’ money and credit. You do not need to be wealthy to do real estate. You only need to learn basic skills that allow you to speak with investors who will let you use their cash and credit once they understand the benefits.
Real estate investing is for anyone interested enough to learn how to use different strategies to create streams of income from rental properties. It’s not just for the wealthy, BUT the single-most common thing that the top 1% of the wealthy on the planet share is that they all participate in real estate investing.
MYTH #4: You have to be licensed and certified to invest in real estate.
You do NOT need to be a licensed real estate professional to get involved in real estate investing.
Let’s go back to being a broker.
And you don’t need a license to do this type of transaction.
As a broker, you are buying a property at a discount from sellers who are in trouble or have a problem that you can solve. You can truly help them.
It is therefore not immoral. Quite the contrary.
If being a broker weren’t an excellent way to go, why would so many people immerse themselves into that particular investing strategy?
Being a broker works really well and is the fastest path to building cash flow than any other strategy in real estate investing.
Plus, it’s fun.
You do not need to be an agent or have a real estate license to participate in real estate investing. While you may choose to have a license or you may already have one, you certainly don’t need one. You may work with professionals with licenses, however, because sometimes that may be necessary. However, you yourself only need what is between your ears.
MYTH #5: You need a lot of experience to be a real estate investor.
Experience comes with practice.
You won’t be experienced when you first start out as an investor. What better way to get really good at your new skills than by practice?
Compare real estate investing with riding a bike.
Are you going to look good at first when you’re learning to ride the bike? Heck, no. But in a short time, you are riding like a pro. The more you ride… the more you practice pedalling… the better you get.
The same goes for real estate investing.
You start with basic skills and you keep adding to them. You will literally be learning and earning, learning and earning. It is a great experience.
When you get started in real estate investing you won’t have experience. That comes over time. You’ll keep adding to your experience as you keep moving your goals-needle forward.
Moreover, learn as many strategies as you can and choose those with which you are most comfortable. While wholesaling might not be your cup of tea, fix-and-flipping may work better for you.
Or maybe you want to do buy-and-hold deals so you get rental properties and earn a consistent passive income from each. You can do that in single-family houses and multi-family properties. As you ramp up your experience and knowledge, you may want to do commercial deals.
MYTH #6: Banks are the only way to finance real estate transactions.
If you believe this myth, don’t be hard on yourself. You haven’t learned that there are plenty (and by that I mean more than you can count) of individuals who will be grateful to let you use their cash and credit to put to use in your deals.
It’s a win-win.
You benefit from accessing their money to use in your deals; investors benefit in the form of returns. And it’s not just the type of returns you might think.
Did you know some people don’t want more money?
- Some people don’t want more money.
- What they can use is deductions and depreciation in your properties for their taxes. That’s a bigger benefit to some people.
- Others want a long-term arrangement where they receive a check every month, and the secret is that they don’t mean right away. It’s how you structure the deal.
- Some people will want to wait until further down the road to see returns. There are benefits to this arrangement, too!
Investors aren’t interested in any of that. They look at the numbers in the deal and how they can benefit. Therefore, will their involvement in your deals put money in their pocket month after month for years to come?
Banks aren’t the only way to go for funding your deals. You may not qualify for a traditional bank loan anyway. Banks won’t work with individuals who have too much debt already or a low credit score.
Even if you can go to a bank for a loan or two for your deals, you will be capped out and they won’t keep lending to you. It’s just their rules. Private investors are an excellent alternative. You can raise private capital a lot more easily and quickly than you might imagine.
MYTH #7: There is no room for failure!
Why are people so afraid of failing?
Failure is a part of life!
You can’t avoid it, and you cannot move forward, learn something new, gain better skills or literally do anything without risking failure events.
That’s all they are… failure events.
What’s great about what being an investor is to cut the learning curve for others interested in being successful real estate investors.
They get to learn from mistakes… and experienced investors have plenty.
There’s plenty of room for failure events. That’s how you have to think of them. In fact, failure is absolutely necessary for real estate investing. Failure is something all successful entrepreneurs move through. They don’t let their failures stop them from their goals. You cannot expect that you’ll do everything right the first time or even maybe the first few times. Failures do not kill you.
Related: Reasons Investing in Real Estate Is Easier Than Ever