Myth 1: It is too late to invest. I’m too old to wait for an income.
Fact: It is never too late. The focus should be on positive cash flow and not on
the mortgage pay off date. It is easy to own several rental properties that will
pay you enough to not only pay the mortgage, but also give you a nice income.
Myth 2: I can’t afford to buy property now. I’ll wait until my house is
paid for, then I’ll look into it.
Fact: Your house has equity in it already. You can use that equity as a down
payment on an investment property and realize a positive cash flow from the
rent.
Myth 3: The Real Estate bubble will burst and I’ll be left holding an
empty balloon.
Fact: It is possible that interest rates will rise causing fair market values to
lower, but that isn’t likely. The economy has been very stable. Rent rates have
been predictably low in most markets. As markets correct themselves there will
be some areas that rent inflation will occur and can only mean more money in
your pocket. The key is finding the right location for investing.
Myth 4: Interest rates must rise and keep rising.
Fact: The Federal Reserve Board has been doing an excellent job in keeping
inflation at so low an incline it is almost flat. Hurricanes Katrina and Rita,
and the recent spike in oil prices have caused a slight increase in rates, but
the tide turned in the oil prices and inflation seems to be checked. Without
going into complicated economics, the Federal Reserve has been keeping inflation
clipped by tiny hikes in interest rates. The job market and labor force has
maintained balance, therefore the slight increases are actually good for the
economy and for investment security. Consumers are utilizing equity loans for
their spending and huge spikes in interest rates would basically collapse the
growing economy.
Myth 5: I don’t have any extra cash so a $0 down payment loan is the best
route to start my real estate investment career.
Fact: If you don’t use any of your own money, your mortgage will be higher. $0
down means 100% of the loan equals 100% of the value. That kind of ratio means a
negative cash flow. While negative cash flow is not a huge problem for someone
who has available cash, negative cash flow for someone who lives from paycheck
to paycheck is financial suicide.
Myth 6: A fixer-upper is a cheap way to riches.
Fact: A fixer-upper can put money in your pocket but there are so many pitfalls
that you need to be very careful. Buying well below market value for a house
that needs a new roof will only be profitable if you just put the new roof on.
Thinking that you need to not only fix the roof but put in another $20,000 of
refurbishing to make it perfect is not good strategy. The more money you pour
into a fixer-upper, the less profit you’ll realize when you sell it. Buying a
fixer-upper, making it perfect all for under market value, then renting it is a
better way to make money on that type of project.
Investment Property Coach Alex Anderson Connects Real Estate Investors (From All Around The U.S.) With High-Quality Investment Properties. Get A Free Copy Of Her New eBook, “The Investor’s Guide To Renting [http://www.greatinvestmentproperty.com/contact.htm]” at: [http://www.GreatInvestmentProperty.com]
