The real estate market has long been perceived as a safe haven for capital. However, behind the facade of apparent stability lies a multitude of false beliefs that distort perception and lead to erroneous decisions. The mirage of easy profit, “ever-rising prices,” and “rent that feeds” remains resilient, although reality dictates different rules. To eliminate risks and assess real prospects, a deep understanding of mechanisms is required, rather than following common templates. Exposing the most persistent myths about real estate investments helps to form a sound approach to planning and avoid costly mistakes.
Myth #1. “Real estate investments are the most reliable investments”
The deception begins with the term “always.” Even such defensive assets as apartments and commercial premises depend on dozens of variables: from the Central Bank’s credit policy to the state of engineering networks, from demand dynamics in the area to the political situation in the region. Prices for apartments in Sochi, Surgut, or Yaroslavl may not only stop but also decline in the face of oversupply or a change in regional development strategy.
In Moscow, from 2014 to 2017, the secondary market showed negative dynamics: price reductions reached 15% in ruble equivalent, despite the influx of migrants and an increase in rental demand. This proves that price stability is an illusion, not a market law. The mirage of stability turns into stagnation, loss of liquidity, and rising maintenance costs, especially in the case of improper location.
Myth #2. “Renting out an apartment always provides passive income”
Counting on carefree income without considering expenses is a strategic mistake in the context of myths about real estate investments. Owning a property obliges covering utility bills (on average from 4,500 to 8,000 rubles per month for a standard two-room apartment), contributions to major repairs, property tax (0.1–0.3% of the cadastral value), repair works, and, if necessary, services of a management company. For an apartment worth 8.5 million rubles in a business-class residential complex, monthly obligations easily exceed 20,000 rubles.
If the rent brings in 55,000 rubles per month, and vacancies between tenants amount to up to 2 months a year, the actual profitability decreases to the level of a bank deposit—not exceeding 4–5% per annum. Additionally, the tax burden increases after the cancellation of tax deductions starting from 2023. To make a profit, an investor must plan carefully, not rely on the illusion of a “feeding apartment.”
Myth #3. “Real estate prices always rise”
The myth of real estate investments is deeply rooted, especially in post-Soviet mentality. However, the numbers tell a different story. In St. Petersburg, from 2022 to 2023, growth rates for new buildings slowed to 1.8% per year, and for certain segments, including apartments, a decline of up to 7% was recorded. Such declines are typical for overheating or stagnation phases when the market transitions from expansion to consolidation.
Negative dynamics are also observed in monocities, where dependence on major enterprises leads to price volatility. In Novotroitsk, Ussuriysk, Kopeysk, apartments lose up to 30% of their value in 3–4 years with a decrease in population and the closure of plants. The hope for an “ever-rising apartment” is not justified in the face of deteriorating infrastructure and declining migration attractiveness.
Myth #4. “Commercial real estate is always more profitable than residential”
Income level is not the only indicator. Risk coefficient and liquidity are more important. Retail premises in street retail can bring in 10–13% per annum, but remain illiquid in case of the tenant’s business closure. The COVID-19 pandemic showed how quickly an income-generating asset turns into a vacant property that requires payment for maintenance, security, and electricity without any income.
In 2021, in Moscow, over 3,400 vacant premises were recorded on the ground floors of residential complexes, with more than 27% remaining unoccupied for 8 months. Even premium spaces in the “Moscow City” towers stood empty, losing up to 15% of their value per year. Additionally, taxes and depreciation increase. The attractiveness of income turns out to be deceptive if the risk of changing the trading format, closing small businesses, or shifting traffic online is not considered.
Myth #5. “Investing in new developments brings quick profits”
Betting on price growth at the excavation stage works only with a precise understanding of the market. However, since 2021, developers are moving towards dynamic pricing: speculative markups are already included in the initial cost. At the same time, the delivery date may be delayed by 6–12 months, especially for small developers.
Out of 278 residential complexes delivered in Russia in 2023, over 40% delayed commissioning, and 16% froze construction altogether. Such risks undermine the calculation for quick resale. Additionally, increasing mortgage rates and a decrease in demand due to oversupply further reduce profits. Without a clear understanding of the segment, area, developer, and legal conditions, participation in shared construction becomes not an investment opportunity but a risk.
Myth #6. “Investing in foreign real estate is a guaranteed insurance”
The stability of foreign markets is another myth about real estate investments, especially in Turkey, the UAE, Bulgaria, and Georgia. Buying apartments in resorts is often accompanied by hidden restrictions: inability to obtain permanent residency, resale limitations, high maintenance fees, and double taxation.
In Dubai, average maintenance fees exceed $3,500 per year for a 60 m² apartment. Additionally, non-residents face strict tax reporting rules, obligations for annual registration renewal, and property rights documentation.
Furthermore, investors face currency fluctuations, capital withdrawal restrictions, and in case of sanctions pressure, transaction blocking. Outside the EU, the “first buy, last out” rule applies—during unstable policies, it is most difficult for a foreigner to sell the asset.
Myth #7. “Real estate income is higher than from banking instruments”
Comparing with deposits is not always appropriate. Rental yield averages 3.7–5.2% per annum in Russia after deducting all expenses. Deposits in Russian banks offer a rate of 14–16% with interest capitalization, full insurance, and minimal risks.
Financial instruments do not require maintenance, time for management, interaction with tenants, and legal actions. Returns on OFZs (Federal Loan Bonds) and mutual funds also allow forming a passive portfolio without burdens. Only professional analysis allows comparing risks and benefits and choosing a strategy based on the horizon and goal.
Main expenses that novice investors overlook:
- Monthly utility payments—ranging from 5,000 rubles in regions to 20,000 in major cities.
- Property tax—0.1–0.3% of the cadastral value.
- Depreciation repair—starting from 50,000 rubles annually.
- Management company commissions—8–12% of the rent.
- Vacancies between tenants—up to 90 days per year.
- Insurance—7,000–15,000 rubles per year.
- Costs for finding a tenant and contract formalization—up to 1 month’s rent.
Discipline Instead of Belief in Real Estate Investment Myths
Investing in real estate requires not trust in myths but accurate calculation and balanced analysis. Careful study of costs, market conditions, risks, and goals helps to avoid traps and preserve capital. Myths about real estate investments distort perception, replace logic with intuition, and lead to mistakes. Only by rejecting generalizations and focusing on numbers can real estate be transformed into a growth tool, not a source of losses.
The Czech Republic occupies a special place on the international investment map due to its balanced combination of profitability, stability and legal protection.
The pros of investing in overseas commercial property turn an asset into a foundation of long-term wealth. Yield, stability, capital protection and appreciation create a strong financial foundation. Special attention should be paid to the Czech Republic, a country that combines all the advantages for international investors: a stable economy, transparent legislation and high demand for commercial leases.