Famous philanthropist Andrew Carnegie once said, “Ninety percent of all millionaires become so through owning real estate.” If you’re thinking like Carnegie and are interested in building your fortune by acquiring investment properties and making rental income, here are a few common real estate investment myths many people believe—that simply aren’t true.
You Need to be Wealthy to Invest
Many people mistakenly think that you must possess vast wealth to even begin to invest in real estate. This simply isn’t the truth. Anyone can get started by purchasing a single investment property. Even without having tons of money, this can be done through real estate brokers. Acquire an investment property, put some elbow grease into it, then rent or sell to create revenue. Having a rental property will bring in regular residual income, while flipping and selling a house right will make you money once—and the amount you make will depend on housing market fluctuations.
It’s Best to Purchase in a Down Market
When you decide to invest in real estate, you might assume the best idea is to wait until we’re in a “down market” to make your move. This is not the case when it comes to investing in rental properties and there’s no need to “time the market.” Investing in real estate is a long-term investment, and the goal is to create cash flow, which can start at any time. While your initial purchase price upfront might be less, the amount of rent you’ll charge will also be lower. Property price changes also increase or decrease the amount of rent you’ll charge once the property is ready to lease.
You Must be a Current Home Owner to Become an Investor
There is no rule that states you must own a home before investing in real estate. In fact, an ideal setup if you don’t currently own a home would be to purchase a duplex or apartment. With a multiple-unit rental property, you’ll have a place to live and can be an owner-occupier and rent out the remaining units.
Property Investment is Passive
The truth is, you will have to work on your investment property a bit to make it profitable. This might be by fixing it up, making repairs, finding tenants, filling vacancies, and more, unless you use a property management company like our team at Bancroft & Associates. Property investment isn’t an entirely passive way to make additional income. The more hands-on you are when it comes to your property, the more profit you’ll have the chance to make.
Investment Property Is Risky
As with anything in life, there is some risk involved when you purchase an investment property. If you work with a reputable real estate broker or a property management company, however, the risk of losing money is minimal. Especially when you compare rental home investment with other forms of investing such as stocks, bonds, mutual funds, and other forms of investing that are less predictable. People always need places to live and are always looking for great rental homes.
Ignore Properties in Less Developed Areas
Many people assume the only way to make a profit on their investment property is to find available properties in central business districts. While these properties can make good investments, the cost to acquire them and create additional income for yourself is higher. The ideal way to invest in a rental property is to search for areas that aren’t yet at their peak but show potential for future growth. This is where the help of a seasoned real estate investor becomes invaluable.
Your Rental Investment Strategy Must Wait Until You Are Older
A common myth is that only older people should begin investing in rental properties. This is also completely false. In fact, by investing when you are young, you’ll have more years for your property to yield a profit. You’ll also have more time to do any home improvement work on your own. This will only lead to saving more money over time by increasing the revenue from your investment.
Don’t let these common myths about real estate investing keep you from acquiring an investment property and becoming a real estate investor in Tucson. Transform your life and create a new level of wealth for generations to come.
