Real Estate Investing Myths - Busted

Myth 1: It is too late to invest. I?m too old to wait for an income.

Fact: It is never too late. The focus should be on positive cash flow and not on the mortgage pay off date. It is easy to own several rental properties that will pay you enough to not only pay the mortgage, but also give you a nice income.

Myth 2: I can?t afford to buy property now. I?ll wait until my house is paid for, then I?ll look into it.

Fact: Your house has equity in it already. You can use that equity as a down payment on an investment property and realize a positive cash flow from the rent.

Myth 3: The Real Estate bubble will burst and I?ll be left holding an empty balloon.

Fact: It is possible that interest rates will rise causing fair market values to lower, but that isn?t likely. The economy has been very stable. Rent rates have been predictably low in most markets. As markets correct themselves there will be some areas that rent inflation will occur and can only mean more money in your pocket. The key is finding the right location for investing.

Myth 4: Interest rates must rise and keep rising.

Fact: The Federal Reserve Board has been doing an excellent job in keeping inflation at so low an incline it is almost flat. Hurricanes Katrina and Rita, and the recent spike in oil prices have caused a slight increase in rates, but the tide turned in the oil prices and inflation seems to be checked. Without going into complicated economics, the Federal Reserve has been keeping inflation clipped by tiny hikes in interest rates. The job market and labor force has maintained balance, therefore the slight increases are actually good for the economy and for investment security. Consumers are utilizing equity loans for their spending and huge spikes in interest rates would basically collapse the growing economy.

Myth 5: I don?t have any extra cash so a $0 down payment loan is the best route to start my real estate investment career.

Fact: If you don?t use any of your own money, your mortgage will be higher. $0 down means 100% of the loan equals 100% of the value. That kind of ratio means a negative cash flow. While negative cash flow is not a huge problem for someone who has available cash, negative cash flow for someone who lives from paycheck to paycheck is financial suicide.

Myth 6: A fixer-upper is a cheap way to riches.
Fact: A fixer-upper can put money in your pocket but there are so many pitfalls that you need to be very careful. Buying well below market value for a house that needs a new roof will only be profitable if you just put the new roof on. Thinking that you need to not only fix the roof but put in another $20,000 of refurbishing to make it perfect is not good strategy. The more money you pour into a fixer-upper, the less profit you?ll realize when you sell it. Buying a fixer-upper, making it perfect all for under market value, then renting it is a better way to make money on that type of project.

Real Estate Investing Myths - Busted

Myth 1: It is too late to invest. I?m too old to wait for an income.

Fact: It is never too late. The focus should be on positive cash flow and not on the mortgage pay off date. It is easy to own several rental properties that will pay you enough to not only pay the mortgage, but also give you a nice income.

Myth 2: I can?t afford to buy property now. I?ll wait until my house is paid for, then I?ll look into it.

Fact: Your house has equity in it already. You can use that equity as a down payment on an investment property and realize a positive cash flow from the rent.

Myth 3: The Real Estate bubble will burst and I?ll be left holding an empty balloon.

Fact: It is possible that interest rates will rise causing fair market values to lower, but that isn?t likely. The economy has been very stable. Rent rates have been predictably low in most markets. As markets correct themselves there will be some areas that rent inflation will occur and can only mean more money in your pocket. The key is finding the right location for investing.

Myth 4: Interest rates must rise and keep rising.

Fact: The Federal Reserve Board has been doing an excellent job in keeping inflation at so low an incline it is almost flat. Hurricanes Katrina and Rita, and the recent spike in oil prices have caused a slight increase in rates, but the tide turned in the oil prices and inflation seems to be checked. Without going into complicated economics, the Federal Reserve has been keeping inflation clipped by tiny hikes in interest rates. The job market and labor force has maintained balance, therefore the slight increases are actually good for the economy and for investment security. Consumers are utilizing equity loans for their spending and huge spikes in interest rates would basically collapse the growing economy.

Myth 5: I don?t have any extra cash so a $0 down payment loan is the best route to start my real estate investment career.

Fact: If you don?t use any of your own money, your mortgage will be higher. $0 down means 100% of the loan equals 100% of the value. That kind of ratio means a negative cash flow. While negative cash flow is not a huge problem for someone who has available cash, negative cash flow for someone who lives from paycheck to paycheck is financial suicide.

Myth 6: A fixer-upper is a cheap way to riches.
Fact: A fixer-upper can put money in your pocket but there are so many pitfalls that you need to be very careful. Buying well below market value for a house that needs a new roof will only be profitable if you just put the new roof on. Thinking that you need to not only fix the roof but put in another $20,000 of refurbishing to make it perfect is not good strategy. The more money you pour into a fixer-upper, the less profit you?ll realize when you sell it. Buying a fixer-upper, making it perfect all for under market value, then renting it is a better way to make money on that type of project.

Real Estate Bird Dogging-A Great Way To Build Investing Confidence

One of the problems faced by many newbies (new investors) in the real estate business is lack of confidence. Confidence cannot be built without doing the activity that you are trying to build confidence in. This presents a problem with most people because real estate is not something that you can just practice, you cannot practice buying a house, or practice selling it. You could pretend to buy houses I guess, or pretend to sell houses, but pretending is for kids. This is where real estate bird-dogging comes into play. It gives you a reason to practice, you get paid. Now if money won’t make you practice then nothing will.

Instead of not getting paid for all those hours spent learning the market, you could be making thousands. I cannot think of a better way to learn real estate than getting out and looking for good deals, then finding good deals and showing them to buyers, who pay you for your services. Then after the buyers close you can follow the progress of the home and see if you made a good decision or not. The best part is that during your practice, even if you made a not so great decision you still get paid, and you do not lose a penny.

I started out my investment career as a Realtor. I built my confidence through selling investment properties to other people and watching them make money. After selling 9 homes to other investors and seeing them profit tremendously, I knew it was time for me to start making myself some money.

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