[KNOWLEDGE] – 6 myths in real estate investment that every investor must know

Real estate is always a hot topic, especially in recent years. To be successful in investing in Real Estate, you need to be equipped with basic knowledge and understand what is true and what is a myth in this field.

1. Land is scarce

Although the land is indeed limited globally, technological progress is helping to bring the limited land available to full use. However, most real estate agents will try to convince investors to buy a particular piece of land by "inflating" the property, so that you believe such a piece of land is scarce rare globally, especially in the context of daily population growth. And in the end, they concluded that land prices are bound to continue to rise. Therefore, scarce land is just a "trick" to urge investors with a FOMO mentality (fear of missing out) to decide to buy now.

2. Selling your house yourself saves you a lot of money

When selling your home, you can do all the processes yourself to save money as you won’t have to pay any commission fees. However, many homeowners don’t know that real estate agents have built a rich database of buyers. So when you authorize them to sell your home, they’ll list it on the site and buyers can get a notification if your property meets their criteria.

On the other hand, selling your home yourself means you have to rely on word-of-mouth advertising, social media, and signs on your doorstep. In addition, if you do not have much knowledge about real estate, there will be a lot of real estate terms that you do not understand and potential buyers may ignore you. And this can cost you more money and a lot of your time.

So don’t try to sell your home on your own if you’re new to real estate investing, partner with a real estate broker to guide you through the entire process.

3. Land will always increase in price

Many people invest in land because they believe that land will always appreciate. Over the past decade, land prices have increased nearly a dozen times, leading people to believe that investing in real estate will always yield great returns.

However, when economies in developed countries like the United States and Japan are in crisis, property prices can drop by 40% or more, meaning your property’s value can also go down. Therefore, the view that real estate always appreciates is one-sided because its prices are related to economic conditions.

4. It takes a lot of money to start investing in real estate

Many people think that they need a lot of money to start investing in real estate, but this is not true. Investing is not the same as owning a home, when you invest you expect to receive a return on the money invested, allowing you to pay back your mortgage or loan over time.

So, if you want to invest in real estate, you can look for partners or lenders. All in all, every investment is risky, so you must have provisions.

5. Repair and Resell Strategies That Will Make You Rich Quickly

This is perhaps one of the most common myths circulating in the real estate industry, when investors buy old homes, repair them, and resell them for a profit.

It is true that you can make money with this strategy, but this is not a get-rich-quick scheme as it requires a careful and calculated plan. You must assess the property, calculate repair and labor costs, and ensure that the amount you spend buying the property does not exceed 70% of the repair cost. If everything goes according to plan, you can make about 30% profit.

It should be noted that if the real estate market crashes, you don’t need to sell the property to cut your loss, you can keep it until the market recovers.

So, in the end, you may find that investing in real estate doesn’t make you a lot of money in the short term.

6. Management of rental properties is too complicated

Yes, managing a rental property involves a lot of work. You always have to make sure that your rental property is in good condition, from plumbing, and bookkeeping to rent collection.

However, you don’t have to do everything yourself, you can choose to entrust your estate to a real estate management company to manage your property, but be aware that you will have to pay them a certain amount. However, this money is well worth it because you will save time and effort to meet the needs of tenants. The property management company will also have to make sure that your property is always in top condition.

To start investing in real estate, you must thoroughly research and distinguish between myths and facts about real estate investing. This will help you avoid being scammed into buying valueless real estate and also help you develop your ability to identify potential properties. In addition, partnering with a reliable real estate brokerage company will help you get the most up-to-date information when new investment opportunities arise.

Thanh Long