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Property Investment - Myth Busting

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By : Stephanie Sowerby    99 or more times read
No matter the industry, there are always misconceptions and myths involved. Obviously the property investment industry is no exception which is why this article attempts to give investors more piece of mind, discussing a little more about some of the most common misconceptions.

Property investment also demands time investment…

Companies exist that are dedicated to helping you so you invest as little time as possible which allows you to get on with other work or investments which will make you more money. With flipping (buying and selling) many of these companies offer aid throughout the entire process, from renovation to sale, and portfolio management.

Similarly for buy to let investment properties, the management companies will sort out everything for you causing you to barely lift a finger. This isn’t to say that you shouldn’t take a solid interest in the process and your property decisions. Obviously these companies charge but property investment with little time investment is a possibility.

I’m no expert so there’s no way I can make money from property investment

Property investment is one of the simplest types of investments, much easier than things like stocks and shares. Any investment comes with a learning process and by getting the right advice and through plenty of research property investment should get you a good return. A good advisor is interested in your investment goals so take note of these people.

There’s too much risk involved

Any investment poses risks, but some are less risky than others. The level of risk is dependent on how much capital is invested and how much the investment is leveraged or geared. The property market is a cycle obviously much slower than the stock market which actually means that the platform is much more stable and less volatile. If you consider that if an area was devaluing and property prices were going down, this would take several months for this process to occur. If you compare this with the stock market a substantial drop in the market could happen in the space of a couple of hours and this could even be the result of a bad rumor.

This can be made a little safer in some ways when it comes to the stock market by using either stop losses or predefined sell orders, however, the loss could still be great in an extremely fast moving market. Property is a much safer investment option because the chance of recovery is much more likely. This is especially true if you have positive equity or were lucky enough to purchase a legitimate below market value property.

No money down means that the investment doesn’t cost anything

With regard to this I must recommend due diligence. This is not to say that companies don’t exist who offer legitimate no-money-down deals. Usually this just means that there is no deposit to pay upon reservation but the usual things like legal fees and tax are still chargeable. It is also advisable to get any property surveyed and so these are other costs involved.

It is impossible to invest in property with absolutely no money, however, there are deals that will considerably reduce the initial outlay. This is an industry after all.

A lot of money is needed for property investment

This used to be the case particularly as the banks ask for hefty deposits and, although they still do, mortgages with higher percentages are available. Granted, nowadays there aren’t too many banks offering good mortgage options but there are other options available in the property market.

Leasehold investments allow investors annual income from a property without actually owning it. Real Estate Investment Trusts (REITs) have proved a very popular asset to investors over the last few years as well as Property Investment Notes and Property investment Funds, all of which allow for return on investment taking advantage of the growth in the property market.

Any property investment is good

Again due diligence must be taken where property investment is concerned. Location is everything and make sure you’re buying what you’re being sold. It may sound fantastic but just do your own research into the area and try to meet with the company at their offices. Then you’ll get a better feel of what they’re about and you can make a good, educated decision on your purchase. If the company is open and completely transparent it is more likely that they are totally legitimate.

These are just some of the comments that I hear quite often and I hope this helps you disregard some of these misconceptions.
Stephanie Sowerby for Fresh Start Living.

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