This archive report was first published on 15 July 2019.
Debunking Real Estate Investment Myths ¶
Investing in real estate can be a lucrative venture, but many myths surrounding it can hold people back from taking on new opportunities. According to Gitonga Muriithi, Head Of Sales and Marketing at Centum Real Estate, these myths often form the basis for fear and can limit people's potential for growth.
One of the most common myths is that investing in real estate requires a lot of money. However, this is not entirely true. While large-scale projects may require significant capital, there are many smaller-scale projects that can be undertaken with less money.
For instance, location and property size play a significant role in determining the cost of land. If you can't afford a one-acre piece of land, you can opt for a smaller plot, such as a 50x100 feet piece of land, depending on your needs.
Another myth is that the value of property will double in a short period. While land can appreciate in value over time, this is not a guarantee. Factors such as infrastructure improvement and planned development in a certain area can contribute to an increase in property value, but this can take anywhere from five to ten years.
Additionally, the opposite can occur, and property value can plummet if the land is found to be in a road reserve or riparian area, prompting demolition by the government.
Another common myth is that past performance predicts future performance. However, this is not always the case. The world has undergone significant changes in the last decade, and business arrangements such as outsourcing, free trade, and cross-border investments by multinationals have created unprecedented booms in emerging economies.
However, it's unlikely that the performance of the past few years will be repeated in the future. Investors who bet on a repeat performance are in for a rude shock.
Other myths surrounding real estate investment include the idea that raising rents will cause tenants to leave and that quick, cheap property deals are a must-have. However, these myths can be debunked with proper explanation and extensive research.
For instance, raising rents may not necessarily cause tenants to leave, especially if the property has added functionality that justifies the higher price. Additionally, quick, cheap property deals may not be the best option, as they can be mired by underlying issues that the seller may not want to disclose.
It's essential to carry out due diligence before purchasing a property, including confirming the authenticity of the land with the authorities and talking to neighbors to get to know the history of the property.
Finally, it's worth noting that you don't necessarily need to engage a professional to sell your home. You can take on the professional duties yourself and save money on agent's commission.
By debunking these myths, people can gain a better understanding of the real estate investment sector and take on new opportunities with confidence.
