Real estate is one of the most popular types of investments, particularly amongst first-time investors who are wary of playing the stock market. Although property can be seen as a low-risk investment, your funds are never guaranteed, so it’s important to do your research and separate fact from fiction. With this in mind, take a look at the real estate investment myths that could be holding you back:
Any Property is a Good Investment
You’ve probably heard people say that bricks and mortar will always hold their value, but this isn’t necessarily true. If you purchase a property that needs serious renovations, but you can’t fund them, for example, the building could be sitting empty for months or years. Alternatively, if you buy a property when prices are at an all-time high, it could be hard to make a profit when you decide to sell. Real estate can certainly be a great investment but don’t assume that any property will provide a fast-track to financial prosperity.
You Should Only Invest in Residential Property
Many investors choose to invest in residential real estate, but commercial properties can be extremely lucrative too. Of course, you could combine your interests and purchase a building that contains both commercial and residential units with help from specialist strata lawyers. Commercial leases tend to be longer than residential agreements and commercial tenants may provide a more reliable cash flow, so don’t overlook the benefits that these types of real estate investments can bring.
You Don’t Need Insurance
Taking out insurance helps to safeguard your assets and may enable you to protect its value. With appropriate buildings insurance, for example, you can ensure you’re covered if your property is damaged by bad weather or flooding, for example. Additionally, tenant default insurance can help to cover your costs if your tenants miss their monthly rental payments. If you’re paying a mortgage on the property, for example, this would enable you to keep up to date with your own payments and safeguard your investment.
You Need More Than $100,000 to Invest in Real Estate
People often assume that you can’t start investing in real estate until you can buy a property outright, but this simply isn’t the case. You can begin profiting from the market at any time, even if you have a lot less than $100,000 to invest. Joining forces with another investor could increase your borrowing power and enable you to purchase a property, for example. Alternatively, you could use real estate investment trusts to invest in the market without actually becoming a property owner.
Building a Property Portfolio
Once your initial investment begins to generate profits, you can use these funds to finance subsequent purchases, if you choose to. By doing so, you can begin building a property portfolio more quickly than you think, which could help you to significantly increase your wealth. Providing you get the professional advice you need, deciding to invest in real estate now could be a great way to finance your future.
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