Investing in real estate is a lucrative business and a sure way of building wealth. Like other lucrative investments, real estate investing contains some myths. For this reason, we will be discussing four of the most common misconceptions about the fix-and-flip strategy.
Flipping a property guarantees a higher ROI
Home Flipping is an income source and a sure way of building wealth but not a smooth way of wealth building. Real estate investing, especially the Fix-and-Flip strategy, is no small feat, which means a higher ROI is not guaranteed always.
Like other businesses, there are highs and lows. So, never expect to make a constant percentage income on every deal. There are times when there will be a complication that would cause you to suffer losses. But there are also times when your ROI will be above expectations. So, if you believe that flipping a property guarantees a certain ROI, please be aware that this is a misconception and should be disregarded.
It’s easy to find distressed properties to Fix and Flip
We can all thank HGTV reality TV shows for this fallacy. To people outside the industry, reality TV makes it easy to believe that it is simple to find distressed properties. Finding the right property is not an easy task and requires a lot of effort to be successful.
Finding properties and owners willing to sell their property “as-is” requires a lot of effort and persuasion. If you believe that it is easy to find distressed properties—just as HGTV depicts—, please be careful when going in.
You need money in the bank to start investing
One of the most common misconceptions among new real estate investors is that before you start investing in this strategy, you need to have huge money in the bank. However, this is a myth! It has never been as easy as it is now to find financing for your investment.
You don’t have to be the wealthiest man in the world to start investing in real estate. You only need some percentage of the amount the property cost—a minimum of 10-percent. If you know your way around the industry, you can start investing with very little capital. All you have to do is check out the type of funding that is suitable for your type of investment.
You need to have a high credit score to receive funds to invest
As mentioned above, real estate investment funding has never been as easy as now. This is because there are now more funding alternatives to traditional lending firms, like banks. Real estate investors now prefer to seek funds from private or hard money lenders, like Lafayette Lending, before refinancing with traditional lenders. This is because private money lenders have faster processing time, quick funding and moderate interest rates. Interested in finding out more, check it out here.
Private or hard money lenders do not care much about your credit score as long as you meet all their other requirements and submit the needed documents. They provide less stringent rules to investors and faster closing time. So, if you plan to start investing in Fix-and-Flip but have a lower credit score, don’t be scared out of the investment.