The real estate business is filled with voices that boldly proclaim half-truths, misconstrue ideas, and shout their knowledge from the rooftops without the experience to substantiate their claims.
Most seasoned investors know this, but for a beginner, it's hard to know when the whole story isn't being told.
It begs the question:
What are some widely accepted “facts” about real estate investing that are actually myths?
Real Estate Myth #1: You Get What You Pay For When Hiring Contractors
Unfortunately, the cost of a contractor doesn't always correlate to their quality. Some contractors charge far more than they're worth, and some don't charge nearly enough. Finding “good help” isn't as simple as looking for the most expensive outfit in town.
Real Estate Myth #2: Section 8 Tenants Are Bad Tenants
There are good and bad tenants in every property class, and while Section 8 tenants may have a negative stigma associated with them, they can also be some of the best tenants in the business (and offer a more reliable source of income).
Real Estate Myth #3: Rental Homes Don't Work About Because All Renters Trash Your Place
Everyone has a horror story (or has heard a horror story) about dealing with a terrible tenant. While they certainly exist, there are solutions to every problem, and this is one of many myths that keeps the market profitable for real estate investors willing to rise to the challenge.
Real Estate Myth #4: Landlords Are Rich, Greedy and Don't Care About Their Tenants
Unfortunately, there is a common misconception that anyone with an entrepreneurial ambition must automatically be wealthy and motivated by nothing beyond their self-interest.
Real Estate Myth #5: Real Estate Always Appreciates
It doesn't, but a lot of people like to pretend it does (after all, that's how a lot of people make their money). Be careful about buying property, because prices can go down, and you absolutely can lose money.
Real Estate Myth #6: Wholesaling Real Estate is a Beginner's Strategy
While it's true that assigning a contract (instead of buying it yourself) can save you a lot on upfront costs, wholesaling has a lot of moving parts that can really mess people up if they don't do it properly.
Real Estate Myth #7: Having an LLC will protect you from everything
Having an LLC will protect you from certain forms of liability, but it will not protect you from bad decisions, changes in the market, competition, and yes, you'll still have to pay your taxes.
Real Estate Myth #8: All real estate agents are intelligent, have your interests in mind, and want to make sure you get a good deal.
In actuality, 99% of realtors know nothing about permits, zoning, subdividing, grandfathered structures, types of insurance required, quality of construction, if there were shortcuts taken… and the list goes on.
Real Estate Myth #9: A property's assessed value is a true indication of its market value.
The local assessor is not an appraiser, and the “assessed value” implies different things in different states.
Real Estate Myth #10: YouTube watching is a substitute for experience.
Real Estate Myth #11: You need to be rich to invest.
Real Estate Myth #12: BRRRR is always the best strategy.
BRRRR is one solid strategy that can work well, but as with any strategy, the “best” one depends on where you're starting from and where you want to go.
Real Estate Myth #13: That you actually own your property!
Even if you don't have a mortgage but, you will always be renting your property in the form of property taxes!
Real Estate Myth #14: The real estate market crashes every 7-8 years.
The last run has been 13+ years (even though a pandemic).