Real estate investing is a proven way to increase your return on investment (ROI) and also provides a hedge against inflation, protection from stock market volatility and a way to get ongoing stable retirement income. Still, many investors are blinded by common myths and misconceptions about investing in real estate, or don’t understand the facts and how to get started. Read on to learn more about the best ways to find income producing property in a stable real estate market.
Real Estate Investment Myths
First, forget everything you learned from watching TV… Home and garden shows are fun to watch – even educational in some ways – but they won’t tell you how to be successful with real estate investing and often make it seem way too easy. Also, it doesn’t necessarily take a ton of money to get started and you can buy investment property using your IRA account.
Here are a few other common myths about investing in real estate:
- Real Estate Investing is Too Risky
- You Have to Be a Certain Age
- Now is Not the Right Time
- Real Estate Investment is Only for Professionals
- All Good Properties / Locations Are Too Expensive
- Investment Properties Take Up Too Much Time
- There is Too Much Competition
- You Must Invest Locally / In the U.S.
- Real Estate Investors Have to Be Landlords
Real Estate Investment Facts
In fact, history proves that investing in real estate is actually much safer than relying solely on traditional stocks, bonds and mutual funds to provide stable investment income – especially for retirement. Although stock market can sometimes pay off when everything goes right, it is subject to powerful forces that are way beyond the control of most investors. On the other hand, buying real estate offers ownership in a brick-and-mortar investment property, which has a tangible value that is not completely reliant on global market swings.
Also, keep in mind that property values generally go up over time no matter what, which means “right now” is almost always the best time to invest, regardless of your age. In addition, anyone can invest in real estate regardless of education or profession, and if you know where to look there are still incredible values to be found. Which brings us to another important point: Don’t be afraid to look outside of your local area – even your home country – to find the best investment properties that will pay the highest returns and offer the most security in terms of market stability.
Finally, don’t assume that you will have to take on all of the maintenance, rentals, marketing and other responsibilities that come with investment property ownership, unless you want to do those things. At least open the door to investing in turnkey properties like vacation homes or luxury condos that are handled by a professional property management service, which allows investors to sit back and collect rental income without taking on the stresses of ownership.
How to Get Started with Real Estate Investing
First, decide on a location and then set your budget. When considering locations other than your home base, be sure to think about the area’s overall popularity and look at how the destination has grown over time. It also helps to see what other investors have to say about their choices and to visit the area yourself enough to develop a feel for where you will be buying the investment property.
When it comes to budget, consider investing with your IRA account if you don’t have enough cash elsewhere. Buying real estate with an IRA account offers a way to secure tax-deferred income that is not dependent on the stock market. This process is simple and frees up retirement account funds to invest in property, while also allowing you avoid paying mortgage interest that would detract from your overall return on investment.
Are you interested in alternative investments like real estate? Let us know in the comments!