Don't Fall Victim to These 3 Real Estate Investing Myths

Rising home prices and historically low lending rates can mean only one thing: the real estate investor is back in full swing. According to John Burns Real Estate Consulting, the number of single-family homes being rented out has jumped 35% since 2006 to 15.2 million, largely as a result of real estate investors taking advantage of what appear to be ideal buying conditions. 

However, buying real estate and counting on it to fuel your retirement, or provide you substantial monthly income, may not be a wise move. We asked three of our Foolish contributors what they believe are the biggest real estate investing myths prospective real estate investors and homebuyers should be wary of. Here's what they had to say. 

Sean Williams

Arguably the most pervasive myth when it comes to investing in real estate is the belief that buying a home is a great investment. To be clear, buying multiple homes and relying on rental income from those homes can actually be a good investment. However, purchasing your primary home and relying on it to fuel your retirement is rarely ever a good idea.

I know what you're probably thinking: "But home prices always go up, so why is this a bad idea?" Most homeowners likely remember the doubling in home prices between 1997 and 2007, but this was an anomaly. Based on data from Robert Shiller's Irrational Exuberance, between 1890 and 1990 home prices did go up at a rate that outpaced inflation, but only by an average of 0.21% per year. Between 1950 and 1997 home prices rose by an even more depressing 0.08%.

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