When I started, I believed a lot of things about real estate that simply weren't true. Some of them I absorbed from gurus, some from well-meaning advice, and a few cost me real money before I figured out they were wrong.
So let me save you the tuition. Here are the 10 myths that hold new investors back, and then the 5 actual mistakes from my own 17 years that you can just skip.
The 10 myths
Myth 1: Real estate doubles every 10 years. I believed this when I bought my first house in 2007. It's a terrible basis for a strategy. The double-digit appreciation of the early 2000s (which peaked around 12%) was the anomaly. A realistic long-run rate is closer to 4%, like the market saw from 1989 to 2000. Buy for cash flow you can verify, not appreciation you're hoping for.
Myth 2: You need a lot of money. Not true, you just have to get creative without it. My favorite low-money path is BRRRR: buy a fixer with hard money, renovate, rent, and refinance at the new value to pull your cash back out. I cover it fully in the BRRRR strategy. The main risk is the property not appraising high enough, so make sure you'll qualify for the refinance.
Myth 3: Buy within 30 minutes of home. For most people, false. The only thing that matters is whether a property moves you toward your goal, and if you live somewhere expensive, local deals often won't cash flow. Judge a market on population growth, crime, price-to-rent ratio (the closer to the 1% rule the better), and consistent (not double-digit) appreciation. A tool like DoorProfit underwrites the deal and pulls neighborhood crime data in one place, so you can vet both the numbers and the area before you commit. Markets like Nashville and Indianapolis held up well through downturns. More on buying away from home in the out-of-state guide.
Myth 4: You need to own a house before you buy a rental. Backwards. If you don't own yet and you know you want to invest, buy a multi-family as an owner-occupant first. You only have to live there a year, and the rental income makes qualifying for the next property easier. My owner-occupied duplex in 2009 was one of my best decisions, and house hacking is the whole subject of how to buy your first rental.
Myth 5: Raising rents makes tenants leave. Only if you do it clumsily. Big jumps cause vacancy; small, regular increases don't. I had an Arlington duplex renting at $1,000 when fair market was $1,200. Instead of jumping it $200, I raised it $100. The tenants stayed (still paying under market), and I gained $200 a month across both units with zero capital improvements.
Myth 6: Only rent to high credit scores. Poor logic. A FICO score reflects payment history, amounts owed, credit length, inquiries, and credit types. Young renters or people with medical or student-loan dings can have low scores that say nothing about how they treat a home. And high-credit tenants leave sooner, because they go buy houses. I weight rental history, landlord references, and ability to afford the rent far more than the number.
Myth 7: It's best to buy in a down market. You can build a great portfolio in any market. Properties cost less in a downturn, but rents are usually lower too, so it's relative. What matters is finding deals with high cash flow now and consistent appreciation over time, in any cycle. I make the full case for that in how to invest through rising rates, recessions, and hot markets.
Myth 8: You need to know everything first. Nobody does, and waiting to means never starting. What you need is clarity on your goal, your strategies, and where to source deals. The rest you learn one deal at a time.
Myth 9: You need a high income to get financing. When I bought that $196,000 duplex, I was earning $15 an hour, and I'd never have qualified without the rental income from the other unit. Anyone buying investment property gets to use the property's rental income to offset the new payment, even on a vacant property, where the appraiser provides a rental analysis the lender counts as income.
Myth 10: It takes a ton of time. It can, but it doesn't have to. I have clients working 12-hour days who own 20-plus units and still travel the world. The time investment is building your team. Once that's in place, the portfolio runs on far less of you.
The meta-skill: ask the right questions
Here's the thing underneath all ten myths. A guy at one of our meetups once asked me how I'd learned everything, and what he could do to learn it too. My answer: "You're already learning, because you know the right questions to ask."
That's the actual skill. So much of investing success is identifying what you don't know, then asking someone who does. I keep question banks by topic, and run every deal through them. A few of the questions I ask on every property:
- Income: What are current rents? Month-to-month or leased? What's the highest rent I could get, and what repairs and vacancy would that take?
- Expenses: What are the utility bills, and can I pass any to tenants? How old are the appliances, water heaters, and furnaces? What needs doing now versus in 3-5 years?
- Operations: Who manages it, and what are the leasing and management fees?
- Financing: Which lender will loan on this condition? What down payment, what rate, does buying down points make sense?
- Exit: What are my exit options? Does the zoning allow me to eventually tear down and build?
You don't need to memorize answers. You need to know which questions to ask, and who to ask. That alone separates the investors who scale from the ones who stall.
The 5 mistakes I actually made
Now the expensive part. After 17 years, these are the five I'd undo:
- Under-improving properties. We cut corners to save money and it cost us more later, in both time and money. Do a proper remodel.
- Paying for inspections before anyone saw inside. We lost over $30,000 in inspection fees on units no one had walked first. Always get eyes inside before you spend on inspections.
- Flipping instead of holding. We've missed out on more than $3M in equity by flipping properties we should have kept. Buy and hold, and pull cash out through refinances or roll gains forward with a 1031 exchange instead of selling. The signals that tell me when it's actually time to let one go are in when to buy, hold, or sell.
- Playing small for too long. We didn't buy our first commercial property until 2018, eleven years after we started. Think bigger sooner, and surround yourself with people doing bigger things.
- Trying to time the market. More than once I was sure a crash was coming, sold too early, and regretted it. Time in the market beats timing the market, nearly every time.
The takeaway
Notice how many of these myths exist to keep people on the sidelines. Not enough money, not enough income, not enough knowledge, wrong location, wrong timing. Almost none of it holds up.
The truth is simpler and more demanding: get clear on your goal, learn which questions to ask, buy for verifiable cash flow, and start before you feel ready. You'll make some of these mistakes anyway, because I did, and so does everyone. But now you know which ones cost the most, and you can spend your tuition on the lessons I haven't learned yet instead of the ones I already paid for.
This article is educational and reflects my own experience. It isn't financial, tax, or legal advice. Run your specific decisions by the right professionals before acting.
