7 Myths of Real Estate

Rateb: Hi everyone. This is Rateb Shukoor with another video. Today I'm going to be talking about seven myths about real estate.

Number one, you have to have lots of money to do real estate. And that is not true. You do not have to really have any money to do real estate. When I started investing in real estate, all I had was $500 in my bank account.

And I bought properties. And on my first deal that I ever did with no money out of my pocket, I made $36,000. And that was in 60 days. But again, I made $36,000 which was a great deal.

Number two, you have to have a very good credit to do real estate. That's also not true. I have done so many deals and I have never used my own credit. I actually have used in the last nine years that I have done real estate; I have used my credit only three times to buy the property. And that was within my first (ERN) business that I used my credit. Once I learned more, I did not use my own credit to buy properties.

From time to time, I have used other people, other people's credit or money, but I have not used my own credit at all.

Number three, you have to buy properties and you have to do lots of repairs and rehab. That is also not true because you can make lots of money buying properties that doesn't need any work at all. Options work great with properties that does not need any work at all. So you don't have to do any repairs in them.

Number four, is you've got to deal with tenants. That's also not true because if you're doing any kind of rehabbing, if you are buying properties to wholesale, also if you buy properties or if you option properties, you don't have to deal with any -- dealing with tenants at all. So that doesn't apply either.

The other one is if you buy a property, you have to deal with the holding cost which is again not true. Some of these things we talked about, if you're buying a property to wholesale, so you don't really have to close it.

If you do wholesale the right way, you're actually putting a property under contract, you're going to find another buyer to close on that deal. So the holding cost in between is really not a whole lot. And even if there is any, it's not your responsibility as long as you negotiate that the right way.

And the second thing is that you can option properties. As soon as you option a property, you work on finding a buyer for it. And when you find a buyer, you close with it.

Now, in the meantime, if the property stays on the market for a month, two or three months, it is not your responsibility to make the payments on that. So you should not have any holding cost on that at all.

So the next thing or number six is going to be you can make money only in a hot market. Again, it's not true. You can make way more money in the bad markets because there are a lot of people who wants to sell. And because there are not so many buyers, you will find great deals out there.

Right now, there are so many great deals that investors are shying away. Most investors are shying away because they are buying into the media and so they are way too many, plenty of deals out there for everybody. And so that's another thing.

And number seven is you have to take huge risks in order to make money in real estate. Yes, there are some risks that you're going to take. But again, there's no risk in the goodies.

Now the good news is in real estate, you really don't have to take these risks. Sometimes when you're wholesaling properties or when you're optioning properties, you don't have to take any risks on those because you are basically -- the whole risk on that is going to be anywhere between $10 to $100 and your marketing cost.

If you option a property for $10, that is the only risk you've got. And your second risk on that is the advertising cost when you're selling the property. Let's say you option a property for 90 days and you cannot sell the property within that 90 days and you spent some money to find a buyer.

So that's the only thing you're going to lose. Other than that, there's no huge risk in real estate. As long as you do real estate the right way, you do not have to take huge risks.

Till our future episodes, I wish you good luck and happy investing.

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