The real estate market is currently in a state of transition. For the past two years, the industry has been a buyers’ market.
Home prices were increasing sharply due to low inventory and pent-up demand. Record-low interest rates afforded buyers more purchasing power as well.
The market appears to have hit a peak and sales are now declining. From June to July, home sales dropped nearly 6% nationwide. This is leading many real estate investors into a state of panic.
Unfortunately, there are many real estate investing myths that are holding investors back. Read on for real estate investing advice to help you navigate this market. Explore our real estate guide that busts four common myths in the industry.
1. It Is a Bad Time to Buy
Many so-called experts are saying that it is a bad time to buy. They are citing high home prices and increasing mortgage rates for their position.
Home prices are coming off their highs in many locations. Other popular locales are holding high prices. There are shifting populations that are also driving regional price increases that are here to stay.
The truth is that the inventory shortages fueling rising home prices are still present. So long as inventory remains low, buyers retain negotiation and pricing leverage.
Mortgage rates are increasing but are not historically high. In late August, a 30-year mortgage can still be secured for less than 5%. Investors simply need to adjust to the new realities in the market.
2. Stretched Too Thin to Manage Multiple Properties
Some investors are turned off by the thought of managing multiple properties. They think being a landlord is hard work and only exacerbated by a business expansion.
However, the most successful real estate investors are not repairing appliances and drowning in administrative work. Instead, they are hiring property managers to do the work for them. This way, they can add more properties to their portfolio and increase revenue.
3. Real Estate Investing Is Too Risky
A lot of emphasis is being placed on the risk involved with real estate investment. Like any business opportunity, there is measurable risk involved.
It is possible that your tenants may miss multiple payments. There is a chance that the economy falters and home prices temporarily decline. In the long run, the benefits undoubtedly outweigh the risks.
4. Invest in the City
There is a widespread belief that real estate investors should focus on developed regions with a dense population. On the contrary, higher returns are achievable by identifying locales primed for growth.
The Covid-19 pandemic changed everything. Millions more Americans are working remotely. Millions more are relocating for political or social reasons.
The paradigm is changing to favor up-and-coming locations. Traditional city powerhouses like New York City and San Francisco are losing citizens.
Your Real Estate Investing Guide to Debunking Common Myths
Do not let something you heard from a friend or on cable television push you away from real estate. In American history, few investments are as reliable as real estate.
If you want to learn more about real estate investing, contact us today to get started with an advisor.