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Are high-profit real estate deals only for the wealthy? Is it possible to buy with no money down? Do you really have to know the “right” people? Let’s answer by looking at some of the myths of real estate.
1. The good real estate deals are reserved for the wealthy.
Of course money helps, but your first deal could be a deal where you put NO MONEY DOWN, if you you seek this type of deal. Smaller deals, using partners, low or no money-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment – these are some of the ways to start with a little and invest in real estate.
2. “Zero down” isn’t possible.
One investor sold a rental property for $1,000 down because he trusted the buyer, and wanted the 9% interest and higher price. A cash-advance on a 0% credit card for the $1,000 ($30 per month payments) would have made it a “zero down” deal. “Zero down” means none of YOUR money is put down, and yes, it happens all the time.
3. “No money down” is the best way.
When you don’t invest some of your own money, you have higher payments. You also spend more time finding suitable properties, and pay more for them (cooperative sellers naturally want more profit for their cooperation). There are zero-down deals out there – they just aren’t always worth doing.
4. You need a lot of experience.
It helps, but it is not required. You really start learning when you buy your first property. Start with common sense, be willing to learn the numbers, and you can start where you are.
5. Good investors have a “knack” for making money.
Well, sort of. But more accurately, they just took the time and risk to learn the market and to continue their education. All investors learn make mistakes. It’s just important that you learn for each mistake and just keep plowing forward, applying your cumulative knowledge and experience deal-after-deal.
6. You have to know the “right” people.
This is another partly true myth. Real estate is all about relationships. It does help to know the right people, so why not start the process? Go to networking events, Talk to other investors, real estate agents, landlords, etc. Make it a regular part of your week to meet someone new.
7. Great negotiating skills are necessary.
Do negotiating skills help with real estate deals? Of course, it is a an invaluable skill to have in this business. But if you learn to run the numbers and make offers based on them, you can be the worst negotiator and still do okay.
8. You have to have insider knowledge.
Insider, outsider, whatever. You do need knowledge, but understand one deal, and you are on your way. Study, and study more, but the best “insider” knowledge comes from experience.
9. Fixer-uppers are the safest way to go.
Poorly planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties can eat away at your profits month after month, even though they may grow in value over time. Fixer uppers are for making money faster, not more safely.
10. You need to make lowball offers.
Low offers may help, but the numbers have to work, and you need a plan. You can offer MORE than the market price and still make money investing in real estate. Just learn how to run the numbers before you do any real estate deals.
Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter and podcast for seniors and retirees that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti as missionaries serving orphaned, abandoned and at risk children for Child Hope International.
