Real estate: 5 common myths revealed

With the fluctuation in the field of investment, people are relying more on investing in real estate. They often have the wrong notion that the graph of real estate market will always rise. But they do not know that the prolonged bull market will come to an end after a certain period. There’s a myth regarding the real estate investment that it is considered to be a low risk when compared with other investment plans. The high risk investments have been more popular but on failure of the investment plan it leads to financial crisis paving the path for debt. They usually take the help of a debt relief program to come out of this situation. So they avoid indulging in high risk investment.

1. Recently, the investors are now relying more on real estate equity. The investors, in order to secure their financial future, are investing in real estate. But it is a myth that today’s valuations will be maintained. Due to many factors the real estate market has been performing well since 1993. And this has been a reason behind real estate being favorable among the investors. But this real estate investment will experience bear market very soon.

People are keener to invest in real estate because of the prospects of long term cash flow. With the rise in the interest rates the values will drop. Refinancing is not possible for floating rate loans, this will prevent from carrying their debt service. Therefore, the capitalization rates will have a historical leap.

2. Many investors harbour a myth that real estate is the Best Tax-Preferred Investment. Real estate is considered one of the options for large gains from taxation but another tax preferred investment is capital gains. Investing in share for the period that you own a house can give you comparatively huge after-tax returns. Most people do not show interest to invest large amount of money into the markets with considerable loans and wait for next 15 years for a particular market investment.

3.  If you think that quoting a higher price than market value will create a scope for negotiating then you need a reality check. The owner can do a blunder by fixing a higher price on the house in the buyer’s market. In this present situation if your house is overpriced then the agent will sell other properties that are comparatively low priced.

While pricing your home you need to keep the following three tips in mind:

• Update your house with latest faucets and other bathroom fittings
• If required give touch ups like fresh paint and new carpeting to your house
• The location of the house can affect on the amount you earn after sell

The agents will keep this in mind while doing an appraisal on the property.  Even after fixing the price of the house an appraisal is required in order to get loan approval from the bank.

An expert advice on real estate will help you to get a fair valuation and guide you accordingly. The price of a house is not fixed by an agent but value is determined by the sellers. Market information is given by the agent to determine the price of the house according to the current value. You can ruin the market opportunity if the price is higher than the estimated valuation.

4. Do you know that real estate deals can help you to earn a fortune? If no, then start giving it a serious thought form today itself. Many people, who spent a lot of time making real estate deals, have been successful in boosting their finances. Why should you be left behind? Start giving some extra time everyday for better understanding the dynamics of real estate and you can very well land up in striking a lucrative real estate deal!

So what exactly is a “Real Estate Bird Dog“? Bird Dogs, at least when used in the Real Estate lingo, are also known as “property locators“, Property Finders or Jobbers.  They are the eyes and the ears of real estate investors that find properties for real estate investors to buy, properties they wouldn’t be likely to find on their own.

Real Estate Bird Dogs go out and find undervalued properties for investors!  Bird Dogs do not buy the properties themselves; however they search neighborhoods, communities, counties, cities, and so on, looking for properties for investors to buy.  With a little experience, many Bird Dogs advance to becoming a Wholesaler, which is actually taking control of a property and then selling it to investors.

So how does a Bird Dog benefit from doing all the searching but not the buying?  Investors pay Bird Dogs in cash when they find a property the investor likes.  These properties can be almost anything: single family houses, multiplexes, duplexes, apartment buildings, commercial buildings, or land.

Investors typically pay Bird Dogs what is called a “Referral Fee” of around $1000 or more.  My personal opinion is that Bird Dogs should be paid a lot more than a mere $1000 if the deal they find makes an investor a lot of money.  It should be more in the realm of 3% to 5% of the net profit the investor realizes.  We will cover more on this later.

If you advance to the Wholesaler stage of real estate investing your cash from a deal can much higher because you are doing a lot more work.  Wholesalers actually gain control of the property by having some type of written agreement (contract) with the seller of the property.