What is Your Real Estate Investment Risk Level?

by David Gerlitz on February 15, 2011

One question real estate investors should ask themselves is, “What is my investment risk level?”

Do you feel comfortable with a high risk, high reward opportunity or are you more tuned to slow and steady growth with little chance of losing your investment. These questions are considerations whether you are investing in real estate, stocks, bonds or other financial assets.

What is Your Real Estate Investment Risk Level?Recently we have been hearing about a trend that some municipalities may have to default on the municipal bonds that were issued. As a conservative investor, you may have thought that your money was safe in these kinds of vehicles but, as with anything, there is a risk. Higher interest rates and lower tax bases may force many states or cities to default or return lower amounts on these investments.

True real estate investments (not speculations) have proven over the long haul to be a great vehicle for financial growth. If you are looking for real estate investment opportunities, there are a number of ways that you can hedge your bets against large losses:

  • Spread out your investment over several single family homes as investment properties. You achieve an economy of scale with multiple properties which allows you to leverage upkeep cost such as appliances, vendors and repairs.
  • Purchase a large investment property with a track record of high occupancy. If you can find one with a low vacancy rate and relatively new updates, ownership can be relatively painless and again, economies of scale come into play.
  • Invest in real estate through a real estate syndication. Real Estate Syndication is simply a partnership to purchase Real Estate. These partnerships can be small ventures between a low number of partners to large syndicates with hundreds of investors. Purchasing through a real estate syndication allows you to have the benefits of real estate investing without the hassles of fixing toilets and answering tenant calls.

Whatever your real estate investment style, make sure you ask these tough questions BEFORE spending your hard earned money on any financial vehicle. Knowing what your real estate investment risk level is can prevent sleepless nights and heartache in the end!

Related posts:

  1. Multi Family Properties As An Investment
  2. How To Utilize Your IRA or other Retirement Account To Invest In Real Estate
  3. What is Real Estate Syndication?

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