If you’re new to real estate investments, it can be hard to sift through all of the contradictory advice floating around and separate the wheat from the chaff.  Here are five of the most common real estate investing myths debunked:

1. You must have the full amount in cash to purchase a foreclosure property. While this can be true in some circumstances (for example at a foreclosure auction or through the courts), if you’re purchasing a bank-owned foreclosure, you will have some of the same financing options as you would for any non-foreclosure investment property. Not all banks, however, are willing to fund purchases of their foreclosure properties. Another alternative may be to seek funds from a private capital (hard money) real estate lender to enable you to purchase an investment property. A short-term hard money loan can  provide you with the cash you need to make the initial purchase and it can be repaid by either refinancing the property with a conventional mortgage or by reselling it.
2. Long-term real estate investments are much more profitable. Savvy investors know that both long-term and short-term investments can reap rewards. Long-term investments usually experience slow and steady increases in value, which can potentially provide a stable income stream, but can also tie up your funds and restrict the amount of liquid capital you have at hand. Short-term investments must be timed well to take advantage of particular market conditions (bubbles) to earn the best return on your investment (ROI).
3. You need good credit to purchase investment properties. While good credit can be a boon to any investor, it is not a hard-and-fast requirement, especially if you are using private capital (hard money or bridge loan) loans to finance your purchases. Typically, this category of lender is more interested in the value of the property itself and the plan you have for it than in your credit score.
4. Real estate investments are too risky. Real estate investments can actually be less risky than stocks and other traditional investment vehicles. If you are willing to perform the necessary due diligence and research, your real estate investments will be less risky and you will have much more control over your investment portfolio.
5. The local market as a whole is either good or bad. This is where knowledge about your local market is essential to making good real estate investments. If you are familiar with your local market, you will be able to recognize trends in the market and in subsets of the overall market. This is especially true if you are in a larger metropolitan area (such as Denver) where market trends tend to vary by neighborhoods rather than overall. If you do your research, you can find the right places to invest at the right times.

Contact Montegra at 303-377-4181 for more information about how hard money loans can help you invest in real estate.