Top 5 Real Estate Myth-Understandings
I have an incredibly interesting career talking with hundreds of real estate investors. Over the course of all these talks I have discovered a definite distinction between newer investors and the seasoned investors which is, “the way they think”. Understandably the new investor tends to think with emotions. They are thinking of ways to get lift off in their investing business. Seasoned investors already have lift off and they learned a whole lot along the way. They tend to think from a practical standpoint of tested and measured results. For newer investors to fast forward past the trials and tribulations or getting lift off in their investment business I would like to share with you some common real estate investing myth-understandings.
Top 5 real Estate Myth-understandings
Myth-understanding #1: Buy cheap property to get better cash flow: Any seasoned investor can share the horror stories and unexpected expenses with cheaper property. Indeed a pro-forma report looks great on paper for a cheap house. The cash flow may look enormous from a percentage standpoint. Large percentage of smaller dollars translates into (well, smaller dollars) what you often have is an older tired out property that typically requires many more repairs. These repairs tend to be costly and a quick drain on the once anticipated large cash flow. Both in my personal investments as well as those investors I work with repeatedly have learned less is not more.
Myth-understanding #2: Buying in your own backyard: Like so many others, I too once fell for the mindset you should invest in your own back yard so you can keep a good eye on your investment property. As years progressed I could not help but notice all the great investments in other markets. Investments that produced much better returns than I could get in my own backyard. Then it dawned on me, If real estate is all about location, not everyone can live in an area that is the best place to buy investment property. It then occurred to me that people investing in stock markets do not live in the backyards of their investments. So why would anyone think that to get the best real estate investments they should invest in their own back yard? Perhaps a fix and flip type of investment may require this (although that is more of a speculative investment) all buy and hold investments are best served buying in best real estate markets.
Myth-understanding #3: Keep up with the latest investing trends or projects: This lends to chasing the shiny new object. As times change rules of investing do indeed change as well, but the game does not change. Pick the game you wish to play, whether it be buy and hold or fix and flip or wholesaling. Whatever is your game learn it, master it and make lots of money playing the game. I see so many people switching from one game to the next and never investing and never making any sizable amount of money as they are always switching games before learning the game. Seasoned investors always master a game before playing in another.
Myth-understandings #4: Get rich quick with real estate: Indeed you can create great wealth in real estate. Depending on your definition of quick, it takes some time to get the momentum going. Once the momentum builds the wealth will grow with relative ease but no question about it, there is time and work involved to create big riches. The good news is the riches can be as plentiful as you desire, it may not happen overnight but it will be solid and can be an investment that has long lasting residual returns.
Myth-understandings #5: Do it yourself to save money: This is one of the first lessons seasoned investors have learned. It takes many continued hours of practice to master skills. Hiring professionals whether it be plumbers to fix plumbing or attorneys to draft leases or property managers to manage the properties, Having mastered skill sets on the job will cost more money but provide better overall value by getting it correct with optimum efficiency the first time.
There you have it...the top 5 real estate investing "myth-understandings". If you are just getting started and looking for help I have a couple of suggestions. First, check out my series, Getting Started In Real Estate Investing and second, give me a call TODAY to get on track fast! 941-718-7761