10 Myths about Property Investment- By: Whitney Cox
It is common knowledge that every industry in existence has its share of myths and misjudgments, and property investment is no different. There are questions that plague the minds of new investors or those considering a move into property. The amount of conflicting information available it can be difficult to decipher fact from fiction. Rather than listing the truths, I have decided to clear up an index of common myths surrounding the property investment industry.
- Property investment is strictly for the wealthy
Of course money makes the world go round and yes it certainly helps, but property investment is not designed with only the wealthy in mind. In fact, many famous entrepreneurs start with a life of very little financial security and managed to build their empires through investment.
- Property investment is far too risky
The reality is that property investment is one of the safest and low-risk options available if you compare it to investments like the stock market or finance companies. Yes, there are risks involved, but these are mostly calculated risks.
- House flipping is the best way to invest
House flipping is a good way to invest but it isnít always the best option. In todayís economy, more often than not it is more beneficial to hold your property until you can strike at the right time. This allows the investor to ride out market slumps and often property value increases over time. Tenanting the house is a good way to keep the debt down while you wait - effectively they pay the mortgage for you.
- You need a lot of experience
This one is more common sense than anything. If every investor needed mass amounts of experience to start off, there would be no such thing as property investment. Experience definitely helps, and you learn things along the way but chances are you already know enough to get yourself started. All you really need is a willingness to learn the process.
- Everyone says property investment doesn't work
Obviously property investment has risks, but donít get hung up on the horror stories! These issues usually arise due to misinformed decisions. The truth is, if you honestly believe it doesnít work, then property isnít for you. If it is the opinion of others, understand that itís very easy for people to criticize money making ideas to fuel their own ego. After all, if it werenít true, what's their excuse for being unsuccessful? Ignore the opinions of those who have never been in the industry.
- Property only works if you Ďknowí the right people
No matter what industry you are in, itís great for business if you have a few solid and trust-worthy connections. Is it mandatory? Absolutely not! Start building your own relationships by talking to other investors; lawyers, trades-men - just about anyone that could help in the future.
- No deposit is the best way to invest
In reality, zero deposit raises your repayments and interest rate, which can be costly if you wish to do a long term investment. Itís also harder to find suitable properties as lenders have more say in the purchase. It is possible to do zero deposit deals but itís not always worth doing so.
- Buying below market value guarantees a profit
This isnít true for every property. Although a property bought below market value might show a profit on paper; there isnít an actual profit until it is sold. This method isnít a surefire profitable investment - so be wary of it.
- There are no good investment properties left
Everybody needs a place to live, families are expanding daily and urgent sales are common. There will always be descent investment properties around; you just have to take the time to look for them.
- You need insider knowledge
Complete one deal from start to finish and you are well on your way. Read as much as you can about investment and talk to the professionals. This will help but the best Ďinsiderí knowledge comes from experience itself.
- The key to a successful investment is by making lowball offers
In every case of property investment, the numbers must work. You can actually offer more money while still making a profit; if you understand creative financing.
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A blogger for property investment companies Auckland, in New Zealand. She is always keeping an eye out for property investment, and loves to keep up to date on the latest developments in real estate investments.