We’ll never know how some investing myths are started, but through my experiences, I’ve learned that some myths are harmless…and some aren’t. A dangerous investment myth could result in you investing incorrectly and losing money, time, or both.
While there are countless myths out there and it would be impossible to cover them all, I want to share with you a few of the dangerous myths out there that you shouldn’t believe. Make sure you share this with your friends and family so they don’t fall prey to these dangerous myths!
Myth 1: Real Estate Investing is Too Risky
One of the worst myths I’ve seen is the claim that real estate is too risky to successfully invest in. Yes, real estate investments require commitment, but the long-term is most certainly worth it. In order to find success in investing, you have to actively work at it. You can’t just let money sit in an account. For these reasons, some people aren’t able to invest in real estate. But for those willing to do a little work and stay organized, they can find great success.
Myth 2: Don’t Invest in the Recovering Housing Market
A common myth (and one that has spread since the real estate marketing started recovering) is that investors can’t invest in the recovering market. They say there won’t be any room because home buyers will purchase all the good properties. This myth likely started when investors left the real estate market during the recession. However, just because they left doesn’t mean they can’t, or won’t, return as the market recovers.
As home building speeds up again with demand rising, there will be plenty of room in the market for investors. Some investors are already successfully building properties and renting them out. That’s just one of many examples to prove that investors have a place in the recovering housing market.
Myth 3: The Past Predicts Future Investments
Sure, we can always learn from the past, but with markets constantly changing, you can’t rely on it to accurately predict what the future will hold. Take the past with a grain of salt; when you start speculating, you can forget concrete evidence and end up making bad decisions.
Myth 4: Don’t Take Any Risk
If there’s one thing we learned from the recession and the stock market crash, it’s to not take excessive risk. While risk presents problems, that doesn’t mean it’s a bad thing. There’s no reward without risk. Rather than focus on taking zero risk, evaluate the pros and cons and determine how much risk you’re willing to take. When properly calculated and monitored, risk can lead to large rewards. Investing in real estate will always have some element of risk and you have to decide if it’s a risk you’re willing to take. For many, the answer is yes.
Myth 5: Only Invest in Local Markets
While it may be easier investing in real estate that is in your local area, you could be missing out on a lot of opportunities. If you do your research, you can learn about up-and-coming markets that may provide a great payout years down the road. If you live in a popular city, like San Diego or New York, it may be difficult finding an affordable investment opportunity. Don’t be afraid to branch out into other areas or at least to do your research and determine all possibilities.
Investing in real estate is a big decision and takes a lot of commitment and dedication. However, don’t let myths scare you away or cause you to make bad decisions. When in doubt, always do your research.