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The 3 Most Common Real Estate Myths Beginning Investors Believe

Mark Ainley
2 min read
The 3 Most Common Real Estate Myths Beginning Investors Believe

Every single year, many individuals get into the world of real estate investing. Some of them think of it as a speedy approach to profit. This is a result of the famous “get rich quick” attitude that makes many of the beginner real estate investors fall flat.

Newbies tend to go into the “win or bust” mode. They put resources into courses and books and expect an astounding boon to come their direction. Unfortunately, most of them never set foot in a property.

Most of these investors fizzle since they don’t enter into real estate business with the right mindset. They are so excessively concerned about creating passive income that they overlook the nuts and bolts of investing, which include networking, negotiation skills, and some hands on supervised experience. The goal of achieving financial freedom is a good thought, but without the basic foundations, the chances of success decline considerably.

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The 3 Most Common Real Estate Myths Beginning Investors Believe

1. Wholesaling is where newbies should start.

It has been said so many times now that many folks probably think it is true. However, wholesaling is not all that it appears to be. Everyone gets told how simple and profitable it can be. Yes, you can make a good profit with wholesaling, but it’s not easy and requires expertise and huge investment.

Related: The #1 Thing Newbies Should Do to Get Started With Multifamily Investing

As a wholesaler, you need to understand what the true ARV is and be in the ballpark on a rehab estimate.  There isn’t a quicker way to lose credibility than to send a deal over with the ARV and repairs way underestimated. I can’t tell you the amount of calls I’ve received from wholesalers saying that they had a deal that was “move-in ready.” Truth be told, the rats were looking for a new place to live.

2. You have to be wealthy to start.

People often believe that you ought to have loads of cash in your bank account. However, in reality, that’s not usually the case. Real estate is quite lucrative, and a lot of the top industry leaders are effective in using other people’s money to work their businesses.

You need some amount of money for putting the property under contract and for closing costs, but apart from that, you can get financing. If you’ve found a good deal, you would be amazed to find many lenders (conventional and private) willing to fund it. When you first start off investing, one of your biggest hurdles will be finding capital. After you establish yourself, finding capital becomes easy. In reality, there is more money than good deals.

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3. You’ll be able to save money by doing everything yourself.

New investors suppose they can spend less by renting houses, making repairs, and handling everything on their own. The biggest problem is most of the beginner real estate investors don’t understand how to manage a property, how to find a tenant, or how long things actually take. They are working full-time and trying to manage the property on the side.

Related: The 5 Most Annoying Misconceptions that Newbies Love

I have full-time crews, and it takes me at a minimum of three weeks for a rehab. How long is it going to take you to the rehab on the weekends? It will take a long time. In the end, you would be better off just getting a second job. It would be a lot less stressful.

I’m not saying that it isn’t possible to save money this way; it is possible to economize by managing things yourself.  But you should definitely have the time, right people, and experience to get the job done. Just because it is the “cheapest” doesn’t mean it is the best choice.

Have you come across any other misconceptions? 

Please share in the comments section below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.