House flipping, and real estate investing in general, is an immense field with great potential for profit. Throughout history, owning and dealing in real estate has been the universal way to increase wealth, and has become synonymous with profit.
However, in modern times, the Internet has become flooded with misinformation about the business. These myths often spring from post-recession paranoia and pessimism.
On the other side of things, idealism often discourages potential house flippers from realizing on the reality of the situation: no deal is ever perfect.
Most of these fallacies are perpetuated by the media or by general public, not by the real estate investors themselves. To conquer your fear of real estate investing, you must first cleanse yourself of the any myths you might hear.
The 8 Most Common Myths Of Real Estate Investing
There are dozens upon dozens of urban legends surrounding the house flipping game. Below are 8 of the most common myths you might hear about.
1. You Need Money To Make Money
One of the most common misconceptions about the business is that real estate investing is reserved for the wealthy. Many people think that you have to already have a great deal of expendable income to purchase a property.
While money does make things easier, it is still very possible to buy properties with no money of your own.
The answer is â€œOPMâ€, or â€œother peopleâ€™s moneyâ€.
Many flippers often choose to purchase properties by using a loan. Over time, if everything goes as planned, you will generate enough expendable income that you can then switch to paying for your properties in cash.
2. If Your Credit Is Bad, You Wonâ€™t Be Able To Get Funding
The standard way to get a loan is by going through a bank, and if you donâ€™t have good credit, this might seem impossible. Fortunately, there are many other ways you can acquire the money needed for real estate investing.
One of the ways you might consider is using a private investor. Private investors can be anyone you know, from a family member, a friend, or a coworker. They just need to be a person with some expendable income looking to invest.
Another option is by using a partnership. If you have no money and no credit, the partner might front the money while you do most of the work.
Finally, if all else fails, you could get a loan from a hard money lenders. Hard money lenders work like banks except they donâ€™t consider things like credit score, income, or assets. They also charge you percentage points on top of the interest.
3. Real Estate Is ALWAYS Risky
Often times, property investing is associated with risk. Sometimes markets depreciate and unforeseen problems occur resulting in a negative profit.
However, there are certain ways you can avoid this risk, or at least minimize it considerably.
One of the ways you can do this is by...