It can easily be surmised that there are definitely more than 3 myths about REI. Very likely, you've heard multiple wild tales, odd conjectures, and serious head scratchers. Once people know you are considering REI, the advice will just roll in. Depending on whether it's from the guy next door whose third cousin tried it, other investors, or even the get rich quick guys on late night TV, there are probably plenty of confusing cross signals to go around. For the sake of keeping it brief, I will confine my input to just 3 random bits of dubious wisdom making the rounds.
Real Estate Investing Myth #1: You need the full price in cash for a foreclosure purchase
This one can be called conditionally true. If you are standing on the courthouse steps trying to pick up a foreclosure, yes, then you should be prepared to hand over the funds, or at least the required deposit amount in a cashier's check. However, if you are buying from the owning bank, the options for purchase are no different from any other home sale. Standard mortgage, Hard Cash loan, liquid capital, or whichever combination suits your strategy best.
Real Estate Investing Myth #2: You get far more by keeping the property long-term
As we have seen with the most recent spike and bust of the early 2000s, the length of time a property is held can be a serious error if the original purchase is made in a hot seller's market. Realistically, long-term growth is actually a much steadier, slow climb. The Case-Shiller Indices provide hard data and graphic representations of the climb interspersed with the ups and downs of the bubble markets.
Real Estate Investing Myth #3: The whole market is either good or bad
Not necessarily. Being in a slow market, locally, means being more diligent about your choices of properties to invest in, locally. It may be a good time to expand your target zone and consider more quickly moving markets outside your immediate area. Examine the information coming in from multiple sources and regions, and make your plans accordingly.
Getting good information and taking the time to research is always your first, best option. Talk to lenders, standard mortgage, and hard money. Consult with wholesalers as well as flippers. Use the contacts you've cultivated and avoid getting advice fourth hand from a friend's uncle's cousin. If you would like to discuss hard money lending options, please don’t hesitate to contact Trust Deed Capital.
