Before you invest, you’ll likely want to perform some research beforehand to learn about the process. While there is plenty of valuable information about investing, there are also some misconceptions. If you’re a first-time investor, you’ll want to learn as much useful information as possible before making an investment decision. Unfortunately, sometimes misinformation holds people back. If you want to learn how some of the most common real estate investment myths are proven wrong, just keep reading.
What Are Some Common Real Estate Investment Myths?
Investing in real estate is a huge decision that requires time, patience, and money. However, several misconceptions can make the process seem harder than it usually is. In addition, when investing in real estate for the first time, it can be challenging to separate fact from fiction. So, we’re here to go over some of the most common real estate investment myths.
- You Need to Be Wealthy
- Investing Is Extremely Risky
- Being a Landlord Is Too Hard
- Timing Is Everything
- You Have to Be a Homeowner First
You Need to Be Wealthy
Many people don’t consider investing in real estate because they believe you need to be wealthy. Or, many people think you need to have a massive down payment to obtain a rental property. However, that’s not necessarily true.
While some investments can be costly, several opportunities don’t require large sums of money. For example, you could purchase a property with an investment partner who can provide financial resources.
Investing Is Extremely Risky
One of the most commonly known real estate investment myths is that “investing is extremely risky”. In fact, many people would advise investing in stocks rather than real estate. After all, you never know how successful your rental property will be.
While it’s essential to recognize the risk, there are also several benefits to investing in rental properties. For example, rental properties generate income each month. So, instead of investing in stocks where the market fluctuates constantly, you’re receiving consistent income with your rental property.
Being a Landlord Is Too Hard
One aspect that holds many people back from rental investing is becoming a landlord. Many people assume it’s too hard, too time-consuming, or too much responsibility. After all, you have to worry about finding tenants, property inspections, maintenance, collecting rent, and so much more.
However, it doesn’t have to be a one-person job. Many landlords with multiple rental properties hire a trusted property management team to help run things smoothly. If you feel like running a rental business would be too much work, reach out to property management in Philadelphia.
Timing Is Everything
Some people assume that you could lose out on profits if you don’t time your investment correctly. That said, there is no perfect time to invest. It ultimately depends on your circumstances. For example, you’ll want to consider your financial stability and familiarity with homebuying before making a large purchase.
When it comes to timing the housing market, it’s hard to plan out a good time to buy. But, you can research the market and take note of market predictions for when you are looking to invest.
You Have to Be a Homeowner First
For some reason, many people believe you have to be a homeowner first before you invest in rental properties. However, there is no truth to this statement whatsoever.
There is no homeowning prerequisite before you can buy a rental property. In fact, some people buy and rent out properties while they are still renting as well. Additionally, you can purchase a property that you can live in and rent out simultaneously, like a duplex.
How Can You Get Started In Rental Property Investing?
Anyone can invest, despite the real estate investment myths. It doesn’t take someone who’s extremely wealthy, a homeowner, or perfect timing to invest in real estate. Instead, it takes time and patience. After all, the process is often pretty lengthy, from when you invest until you have tenants living in your rental.
Whether you’re investing in single-family homes or multifamily units, consider a few preparation steps. Here are a few ways you can go into your investment feeling at ease.
- Evaluate Your Finances
- Look at the Current Market
- Research the Community
Evaluate Your Finances
Before you search for real estate to buy, you’ll want to evaluate your current finances. Before making a large purchase, it’s important to know what you can afford. Then, be careful not to overextend your budget.
Additionally, it could help if you pay off any existing debt before investing in real estate. After all, it could help you obtain a loan, and it can ease financial stress.
Look at the Current Market
Location is one of the most important aspects of a rental property, so it’s essential to evaluate the current market. Figure out which neighborhoods are profitable and determine where you want to purchase. Additionally, looking at the market can help you decide a good time to invest.
Research the Community
Once you’ve determined an excellent area to buy a rental property, you’ll want to research further about the community and surrounding neighborhoods. To learn more about the community, you can visit the area, ask other investors, or ask questions to people who live there. Here are a few things to consider before investing in a location:
- What is the average rental rate?
- Are there nearby local attractions?
- Where is the nearest school?
- What is the crime rate?
- Is the neighborhood quiet or noisy?
Before you invest in an area, make sure you can answer these questions first.
Considerations For Your Next Investment
Once you’ve accomplished the first steps to getting started in investing, there are a few extra considerations to keep in mind. So here are a few tips for new investors:
- Invest Now- Many people believe you need to wait until you’re older and more established to purchase rental properties. However, a great time to invest is when you are young. In fact, young professionals who have the financial ability to purchase real estate can utilize a Federal Housing Administration (FHA) loan.
- Diversify Your Properties- While you likely are looking at single-family home properties, it’s important to diversify your investments. Consider looking at commercial properties, multi-family properties, vacation rentals, or other real estate options.
- Protect Your Finances- Most seasoned investors will tell you how important it is to protect your finances. One common tip is to never invest under your name. Instead, talk with an attorney and create a partnership or an LLC to secure your assets. That way, if something were to happen, your finances wouldn’t be affected.
How to Boost Your Rental Business
Real estate investment myths can hold you back from pursuing a purchase, whether you’re a seasoned investor or a first-time buyer. But, it’s essential to know the facts and do your research to see if you can successfully purchase real estate.
That said, if you own rental properties and it’s getting to be too much to manage, don’t worry. Bay Property Management Group can step in and help boost your rental business. We offer services like tenant screening, rental registration, rent collection, maintenance, and more.
Contact us today if you’re looking for rental property management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.