There are many myths surrounding what it takes to be a successful property investor. Many people (unfortunately) believe luck pays a major role, while others believe lack of time or money is holding them back. The truth is, those are simply myths. Below are some of the most common myths and/or excuses people use for not investing in real estate.
Myth 1: "You need money to make money"
The truth is you don't need a lot of extra money to invest in real estate. In fact, when you take into account the tax advantage, chances are you can afford to borrow more money than you thought possible, especially if you have built up equity in your home for several years. So, speak to your bank manager or finance provider today and ask them to calculate how much you could borrow to invest in residential property. You may be surprised.
Myth 2: "I've got a job, a spouse, kids and little time on my hands"
Lack of time is a poor excuse for not investing in property. Throw out your television and you'll have all the time you need. Polls show adults can spend as much as three hours a day in front of the television, more on weekends. So, if you're stuck for things to do this Saturday, load the kids in the car and start looking around at open houses. You may just find a bargain.
Myth 3: "Investing in real estate won't make me rich"
Henry Ford once said, "Whether you think you can or think you can't, you are right." There is no doubt that investing in real estate does have its risks, but over time, the rewards can be substantial. History shows us that real estate has doubled in value over any ten year period between 1970 and now. In other words, if you buy a $300,000 property today it could be worth $600,000 in 2015. That's an extra $30,000 a year, on top of your income that you could be earning. What are you waiting for?
Myth 4: "There's too much competition"
When property markets are busy, it seems every man and his dog is out there buying up property. Conversely, when markets are slow no one wants to talk about real estate. The secret is - don't follow the herd mentality. If the time is right for you to invest in real estate, ignore what your friends and family are saying and "just do it". Don't sit on the sidelines and wait for the elusive 'bargain' to fall in your lap. Go out and make it happen.
Myth 5: "Investing doesn't work in my market."
Property investment works in EVERY market. True, it may work differently in some markets than in others, but there are investors making money in every city, in every suburb, every day of the week.
Myth 6: "Certainly, inflation, unemployment and the decline of the stock market will kill the economy, so anything I buy will go down in value."
When everyone else is "dooming and glooming", it only clears out the competition. Think creatively and most importantly, ignore what you read in the newspapers. The fact is whatever is happening with the stock market, or the economy, real estate values have continued to rise over the medium to long term.
Myth 7: "Real Estate Agents won't take me seriously"
The right agent can be your best friend and the number one source of bargains. When you find an agent you can work with they will call you the minute a good deal passes their desk, often ahead of other buyers. The key is to educate your agent about what you need and let them know exactly what you're looking for. Repeat business to a real estate agent is like gold, so make sure they understand you'll be giving them business over and over again.
Myth 8: "I need good credit rating to buy houses"
Good credit certainly helps when you buy your first property, which for most people is their home. By the time most first time investors are ready to buy an investment property they have built up significant equity in their home to make credit rating a non-issue. If you don't already own a property, talk to your bank anyway. A solid employment history and records of regular credit card or personal loan payments may be enough.
Myth 9: Real Estate is risky
Real estate is one of the safest long term investment options available today. The stock market is beyond your control because, more often than not, the companies whose stocks you're buying are owned and operated by people who you will never meet, or whom you have no control over. On the other hand, with real estate you (and/or your partner) are the sole owners and have absolute control over every decision associated with your investment.
Myth 10: I need more information before I start
Although you may never learn everything there is to know about investing in real estate, you probably instinctively already know a lot. Success is an ongoing learning process, but these days, with the internet and the number of books published on real estate investment, information is everywhere. Read some books, research on the internet, or enlist the help of other successful property investors.
Note: an intending purchaser should assess the suitability of an investment property in light of their own needs and circumstances or consult an appropriately licensed financial adviser and/or taxation specialist.
