One of the most attractive aspects of real estate as an investment is its accessibility as a direct investment. At the same time, most people choose to directly invest in real estate because they feel more comfortable about risk when they can control the asset. That being said, how do you specifically evaluate and mitigate risk, and further, with such risk analysis, how to you project risk-adjusted returns? (An interesting point about the psychological bias associated with active management being a risk mitigating approach: In 2014, 86% of investment managers yielded lower returns than the S&P 500 Index.)
and a blind trust on the real estate agents when there is an opportunity to learn everything you want and access in real estate industry.
Before you choose a real estate agent, make sure you check his license and previous work record. If possible, you can also contact his previous customers/clients to ask about the services.
As a general rule of thumb, the higher the returns the higher the risk and the lower the returns the lower the risk. With that being said, most times what can make or break a business is management. And, that is true in real estate investing.
If you choose a real estate agent, you make sure and check his license and previous work record. If possible, you can also contact his previous customers/clients to ask about the services.
I agree with laura
Selecting a real estate agent carefully is very important as this can prevent future risks up to a great extent.
make sure you check all the details like license, history and all…
Hi,
No wonder there are lots of risks allied with real estate investment. As Our fellow members have posted, we need to be really causious about each and every aspect and step we take.
I also have few suggestions to share with you all:
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Speak to your city officials to find out the population projection for your desired investment market.
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Use the Internet to do as much research as possible.
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Put together a team of professionals. Realtors, lawyers, mortgage brokers, appraisers, property managers etc.
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Read your local paper.
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Tour the area and pretend as though you were a resident there.
These suggestions sound very simple but if applied, they work like a booster. Hope you like them
Be aware from the fake agents. There is lots of risk in real estate .You must sure before you contact with an agent you should check their work record and approve license. Don’t blindly trust on agent or property landlords.Proper investigate all of the persons you going to be contract.
Risk can be mitigated though if you do the due diligence and crunch the numbers for rental investments. Due diligence can be making sure you got your money right, learn and know everything about the loan, do the proper inspections on the property, and vetting the tenants carefully. You can make sure that the cash flow is positive by conservative estimates upon doing the calculations. I’ve read and heard alot that making money on real estate depends only when you buy and what deal you buy. If you buy the wrong deal, no amount of effort can make it a good one so make sure you analyze every deal correctly.
In efforts to help risk mitigation, careful analysis on the deal is key. Assure, that you have a good cash-on-cash return from positive cash flow, make conservative assumptions on your expenses (think the 50% rule), and sift your tenants like you are sifting for gold. Do these things and risk should be minimized.
There is risk in everything. The only way to overcome the unknown aspects is to prepare as much as possible and analyze the deal at hand. Read and re-read as you will notice new things you didn’t notice before.
There is comparatively less risk in real estate.Real estate investing if done in the right way for the long term will almost always give you results.
If you buying/selling your property through real estate agents you have to check all the detail about agent like - who belongs to a special professional association of agents or not.who have a proper license or dignity ?
While buying or selling a property it is important to consider that is to do proper documentation of the property. Proper documentation will show you that this land is not disputed.
Risk in Real Estate
Yes, there could be a risk in purchasing a real estate property if we do not study the papers or documentations properly. The very important thing to take note is to verify if it is already registered and the seller has been paying the due taxes.
There is one more risk related to commercial property. If investor hires a managemant company for his/her warehouse, retail, offices or etc and doesn’t check company’s reputation, his’her business can really fast lead to bankruptcy.
There is risk in each and every thing you do. So if you are trying to invest in a real estate firm, you should know full details about the company and their policies. Also, there are many websites of private firms from where you can take the reference or expert advice. Simply, you have to be alert when you invest your funds.