Four Common Myths in the Real Estate Market

Are you thinking about dabbling into the real estate industry? Here are some things you should know about it before you get in too deep.

With mortgage rates as low as they are, there are many people dabbling in the real estate market that may not have considered dabbling in it before. Let’s face it. Real estate is a great investment if you are prepared to ride out the storms that are inevitable over the long term. Unfortunately, many people who have decided to get deep into the real estate market have believed some of the common myths and the investments haven’t turned out as planned. Here are some common real estate myths and the truth behind them in case you want to put some of your money into the market.

1. Rental properties are always a great investment. While rental properties typically provide a good return on your investment, the return isn’t always as high as inexperienced buyers expect. Many think that they will get between a 10 and 14 percent return on their investment each month, but it takes awhile for this to happen. There are still other costs that cut into the return, including taxes, maintenance and more. Of course, the more of the mortgage that is paid off, the higher your returns are going to be.

2. The cost of building homes is reduced during these economic times.
While the prices of homes have come way down since the economic downturn of 2007, the prices of labor and materials to build those homes has stayed steady.

3. Adjustable rate mortgages are never a good idea.
Many financial gurus say that adjustable rate mortgages are a bad idea and they should be avoided at all costs. While this may be a good rule of thumb, there may be a couple instances in which they are beneficial to the home buyer. For instance, if you only plan on staying in the home for a few years, you are better off getting an adjustable rate loan because the mortgage rates will be lower. However, it is always best to consult with an experienced and independent mortgage expert before making your final decision.

4. The real estate industry is an easy and laid back job. This is definitely not true and many people find this out after investing a great deal of time and money into the industry. Being successful in real estate takes a lot of long hours, hard work and frustration regardless of the part of the industry you are dealing with. Then there is the worry of the changing market, red tape and much more. If you plan on dabbling in the real estate industry, be ready to face some frustrations and put in the time and dedication necessary to make it work for you.

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