Investing in real estate is a lucrative venture. However, misconceptions continue to shroud it, deterring many potential investors. Common myths include the belief that the sector is as risky as the stock market and needs substantial time and money. These assumptions can be paralyzing and prevent individuals from capitalizing on the wealth-building opportunities real estate offers.
After spending over three decades in the industry, Stephen Davis, the CEO of Total Wealth Academy, has identified six primary F.E.A.R.s—False Evidence Appearing Real—that commonly afflict new investors. These fears are illusions constructed in people’s minds that feel real but aren’t based on reality. Davis delves into these F.E.A.R.s and provides clarity and actionable strategies for overcoming them.
Many people equate the risk of investing in real estate with the volatility of the stock market. Davis explains that while every investment carries risk, real estate is less risky by nature. Those investing in stocks have no control over the market’s fluctuations. Meanwhile, real estate offers tangible assets that can be managed and improved. “Real estate is also a forgiving asset class,” the expert asserts. “Problems can be fixed, unlike in stocks where investors must endure market downturns.”
Another common F.E.A.R. is that real estate investment demands excessive time. Davis good-heartedly shares his experience of working 70 hours a week and almost losing his marriage due to the misconception that managing rental properties would consume even more time. “I met a man who had 123 residential properties and vacationed two weeks a month,” he recounts. This revelation debunked his fear, encouraging him to acquire and manage properties.
This narrative proves that time constraints can be managed effectively with proper education and mentorship. Davis himself learned from a successful mentor, allowing him to streamline his operations to the point where managing a hundred properties took only approximately 20 hours a month. He encourages new investors to seek mentorship and leverage experienced advice to minimize time investment.
In addition, the notion that substantial capital is required to start in real estate is false. The CEO shares how he began his journey with bad credit and no money by wholesaling properties. He earned significant fees by finding profitable deals for investors. Davis highlights that using hard money loans, which provide funds for purchase and rehabilitation, often requires minimal down payment compared to traditional bank loans.
Many believe bad credit disqualifies them from investing in real estate. However, Davis points out that there are loans available that don’t require credit checks or income verification. “Improving the credit score over time can open more conventional financing options, but unlike what many think, poor credit isn’t a barrier to entry,” he supplies.
The F.E.A.R. of losing money in a market downturn is widespread. The industry expert cites real estate investors weathering the 2008 recession without needing to sell properties at a loss, given that rental income continued to rise despite falling property values. He also emphasizes the importance of cash flow, as it ensures continued income even if property values drop.
The sixth and last F.E.A.R. Davis has observed is that many investors believe they can’t use their individual retirement accounts (IRAs) or company-sponsored retirement accounts (401(k)s) to invest in real estate. The seasoned real estate investor dispels this myth, explaining that these funds can be rolled into self-directed accounts, allowing investment in various assets, including real estate. “This misconception stems from misinformation propagated by custodians who benefit from keeping funds in traditional investments,” Davis adds.
Total Wealth Academy addresses these F.E.A.R.s through comprehensive education, coaching, and consulting. Its mission is to teach individuals how to build a second income stream through active and passive real estate investing. The company offers personalized coaching, guiding investors step-by-step through the real estate process. Davis has mentored thousands, sharing the strategies that helped him build wealth while maintaining a balanced life.
Stephen Davis’s insights into the six primary F.E.A.R.s of real estate investing reveal the illusions that hold many back. His detailed strategies and personal stories demonstrate that with the right knowledge and support, anyone can overcome them. Total Wealth Academy offers the education and guidance necessary to navigate these challenges.
