Real estate investments have long been considered a “foolproof” strategy. Alongside gold and currency, square meters were perceived as an untouchable asset. However, this is where most stereotypes and simplified notions have formed, which are far from reality. The market has changed, and along with it, the rules of the game. The overview debunks entrenched myths about real estate investments, revealing the actual aspects of profitability, risks, strategies, and approaches to properties.
Myth #1. Real Estate Always Increases in Value
The position of square meters in the market directly depends on macroeconomic conditions, regulatory policies, infrastructure changes, and even demographic shifts. In cities with declining populations, such as Nizhny Tagil, Kovrov, or Rubtsovsk, prices have fallen by 12–18% over the past 5 years.
Even in Moscow, the growth has been uneven: in areas with mass development, such as Nekrasovka, Solntsevo, or Butovo, the average price per square meter decreased from 245,000 to 208,000 rubles in 2024. The reason is oversupply and infrastructure overload.
Understanding that real estate is not a guarantee of stable growth but a market instrument is critical for calculating profitability. Professional investors track cyclicality: growth in 2010–2012, stagnation in 2015, a surge in 2020–2022 due to subsidies, and a correction in 2024 amid a rise in the key rate.
Myth #2. Renting Out Property Guarantees Stable Income
Another myth about real estate investments: long-term renting requires regular monitoring and is rarely passive. Tenant turnover, property damage, non-payment, legal disputes — these are real risks. Moreover, profitability often turns out to be lower than expected. Real example: an apartment in Kazan (RC “Vesna”), cost — 6.8 million rubles. Rent — 35,000 per month. Yield:
- Gross: 6.1% per annum.
- Net (considering expenses such as tax, depreciation, utilities, 1.5 months of vacancy per year): net yield — 3.9%.
And when using mortgage leverage with a monthly payment of 49,000 rubles at 15% per annum, such an asset goes into a loss of over 170,000 rubles per year.
Myth #3. Investing in New Buildings Is Always Profitable
Construction is a zone of shifting deadlines, bankruptcies, hidden layout and occupancy risks. Developers mask the high cost per square meter with “finishing as a gift” or “mortgages with government support,” but the real overpayment is factored into the price. Example: RC “Seliger City,” Moscow. A 26 m² studio apartment initially cost 5.6 million rubles (2021). In 2024 — 5.9 million. Growth — 5.3% over 3 years, but inflation over the same period — 24.6%.
Adding the cost of repairs (from 650,000 rubles), time to sell (on average 3–5 months), agent commission, and tax — real estate investment loses its attractiveness, resulting in debunking another myth.
Myth #4. Investing in Luxury Real Estate Is a Secure Asset
The premium segment targets a narrow audience sensitive to economic, currency, and political factors. Apartments in complexes like “Zilart,” “Sadovye Kvartaly,” “Lavrushinsky” cost from 65 million rubles. Renting them out can fetch 300–400 thousand per month, yielding 4–5% without considering expenses.
However, the liquidity of such real estate is extremely low. The average exposure time on the market is up to 8 months, and the actual discount when selling is 12–17% off the listed price. Additionally, maintaining such properties (concierge, parking, management company, insurance, repairs) requires 2.5–3 times more expenses than in the economy and comfort classes.
Myth #5. Mortgage Helps Profit from Price Appreciation
Mortgage leverage can enhance profitability only in a phase of active market growth. With a high rate (13% in 2024), the mortgage payment exceeds the rental income even with good occupancy. The amount overpaid to the bank over 15 years for a 9 million ruble loan at 14.2% will exceed 15 million. Even a slight 5% drop in the property price will result in a loss if own contributions were only 20% of the value. Mortgage turns the investment into speculation with a high risk factor.
Myth #6. Apartments Are the Same Asset as Houses
Debunking the popular myth about real estate investments. Apartments are not equivalent to houses in status. Lack of permanent registration, higher utility tariffs, the need for a commercial contract with a management company reduce profitability.
In the “Ye’s Technopark” residential complex (Moscow), apartments of 22 m² are rented out for 32,000 rubles. But with a cost of 6.1 million rubles and expenses (6% tax, management — 3500 ₽/month, cleaning, advertising), the final yield is no more than 3.3%. Moreover, banks finance apartments less favorably: higher rates, shortened terms, larger down payments.
Myth #7. Renovation and Design Increase Profitability
Investment renovation requires strict optimization: the focus is not on design solutions but on practicality, durability, and cost minimization. Overpaying for furniture, decorative solutions, or an “author’s style” does not proportionally increase rent. What really works:
- Vinyl flooring instead of laminate — increases service life by 3–4 years.
- Washable paint instead of wallpaper — reduces renovation costs.
- IKEA + OZON — furniture set up to 80,000 rubles with replacement every 6 years.
- Installation of meters, LEDs, flow filters — saves up to 12% on utilities.
- Universal wall color (beige, light gray) — reduces tenant rejections.
Renovation should pay off within 18–24 months. Anything beyond this horizon is excessive and unprofitable.
Myth #8. Real Estate Investments Abroad Are a Safe Haven
Real estate markets outside Russia are often inaccessible for physical control. In the EU and the USA, strict tax regulations apply: in France, the tax on rental income reaches 45%, in Canada, there is an annual property value assessment with subsequent taxation starting at 1.2%.
In Turkey and the UAE, popular destinations for Russians, there are hundreds of cases of legal conflicts related to servicing, double sales, translation errors in documents. Real estate abroad is not a “safe haven” but a complex asset with a high degree of bureaucracy and unpredictable legislative risks.
Myth #9. Real Estate Is a Diversification Tool
In terms of expenditure structure and management, real estate is closer to a business than a passive asset. Unlike a diversified portfolio of stocks, bonds, currencies, and commodities, the niche requires personal involvement: tenant control, bill payment, interaction with management companies, participation in meetings, legal responsibility. One property does not solve the task but, on the contrary, concentrates risk. Especially when using loans or investing all capital.
Reality vs. Myths about Real Estate Investments
Myths about real estate investments have been formed over decades, but the new economy requires reassessment. Each transaction is not a template but a calculation. Strong profitability arises at the intersection of analysis, discipline, accurate calculation, and understanding of expenditure structure. An investor compares alternatives, models scenarios, calculates liquidity, and makes choices not based on popularity but on numbers. A successful strategy excludes emotions, relies on cold analytics, and uses real estate as a tool, not just an idea.
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