By Kilundo Mbithi
The art and science of real estate investing has baffled many. Many have made millions in returns while others have lost loads of cash. True success in this part of the game belongs to few. It’s no wonder that scores of myths have scared, and quite often derailed, the plans of would-be investors. Below are five of the common myths that keep would be investors away from real estate
Real estate investing is for the rich:
This may well be the mother of all real estate myths. I went into my first real estate venture without any cash at all. Besides cash, there are other forms of leverage available to you. So it should not hold you back.
The real estate bubble is about to burst:
So what? Investors don’t go into a deal because the market is expected to behave in a given way. Rather, smart investors make their money whether the market is moving north, south, or sideways. The problem arises when people follow the crowd instead of getting to the heart of the skill needed to be a successful investor.
All investment in real estate is speculative:
For some reason, people always insist on using the term “speculative.” Speculation refers to the practice of buying into an investment with the hope that prices will go up. It’s a strategy often used in stocks, shares and commodities. If you speculate in real estate, you will be gambling, in which case you may have to wait for a long time to recover.
The hot-zones are about to end:
The myth holds that real estate projects that are hyper-profitable (the hot zones) are here only for the moment. If this were true, it also holds that if you do not buy into one project (NOW!) there will never be another one like it. In truth, before you and I were born, hot zones were “about to end.” I guess that a hundred years from now, the world will still be about to run out of these red-hot zones.
It is better to buy a home than to rent one:
In truth, whether to buy or rent boils down to your priorities. Do you want a home or do you want money in your pocket? In other words, which one is preferable — security, a brick-and-mortar piece of possession, or checks to your bank account every month? Remember: A home is not an investment decision; it is a consumer decision.
With these, you may begin to paint a new picture on your views towards real estate investments if you need to.
The writer is a Registered Valuer, Author and Lead Investment Consultant at investorclinics.com