What Are the Main Risks in Real Estate Investing?

What Are the Main Risks in Real Estate Investing?

Investing in real estate is generally considered a good and safe decision. Owning properties does come with its own risks, however, which are important to understand. Knowing the risks can help you know what you can do to protect yourself and your money!

Main Risks in Real Estate Investing: Liquidity

One of the risks of investing in real estate is liquidity. Liquidity refers to how easy it is to return something to the market in exchange for cash. In real estate, there is no guarantee that you will be able to sell a property for a profit. This lack of liquidity can put you at risk if you need to sell a property quickly for the cash. The good news is that another way to access capital with your real estate investments is either through a line of credit or a home equity loan, so take these into account when you encounter this problem.

Liability

Owning real estate investing can pose more risks because you become liable for the properties you own. One of the easiest ways to protect yourself as a property owner is to purchase properties through an LLC. An LLC offers asset protection for real estate and helps avoid double taxation. LLCs protect you personally should you have to divest yourself of a property. If someone is injured at a property you own in your name, they could sue you. However, if you own property through an LLC, you can use homeowners insurance to cover their injuries. 

Main Risks in Real Estate Investing: Market Risk

In real estate, there is also a risk in what markets you choose to purchase properties in. The market areas in real estate are referred to as MSAs or Metropolitan Statistical Areas. Usually encompassing a major city and its surrounding region, MSAs provide information about what the market is like in those areas. Location is one of the most important things about real estate, so it is good to gather as much information as possible about the area you are looking to buy in. Consider factors like population growth, real estate prices in the surrounding locations, and planned new developments that would make properties be a good buy.

 

Real estate investing can have great returns and is a good way to make passive income. Being aware of the risks of investing can help you make better choices in what you buy and how you invest. That way you can worry less and enjoy the rewards more.

 

Read this next: Why an Inspection is a Critical Part of the Home Buying Process

 Steelbridge Realty LLC  is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.

 



 

$1,795,000
Land For Sale
Active
0.4175
ACRES
LEE
COUNTY
3508 Stuart Ct
Fort Myers, FL 33901
York Manor Subdivision
$5,800,000
Land For Sale
Active
1.3945
ACRES
LEE
COUNTY
1215 & 1233 Braman Ave
Fort Myers, FL 33901
Fort Myers Subdivision
$15,950,000
Single Family Home For Sale
Active
4
BEDS
9
TOTAL BATHS
10,033
SQFT
1240 Coconut Dr
Fort Myers, FL 33901
Palm Gardens Subdivision
New Listing - 3 weeks online
$890,000
Single Family Home For Sale
Active
3
BEDS
3
TOTAL BATHS
3,467
SQFT
1249 Osceola Dr
Fort Myers, FL 33901
Riverside Subdivision
$1,545,000
Single Family Home For Sale
Pending With Contingencies
4
BEDS
5
TOTAL BATHS
3,848
SQFT
1266 Gasparilla Dr
Fort Myers, FL 33901
York Manor Subdivision
$1,422,000
Single Family Home For Sale
Pending
3
BEDS
3
TOTAL BATHS
3,445
SQFT
2943 Valencia Way
Fort Myers, FL 33901
Valencia Terrace Subdivision
New Listing - 2 weeks online
$2,290,000
Single Family Home For Sale
Active
3,230
SQFT
3752 Harold Ave
Fort Myers, FL 33901
Fort Myers Subdivision
Price Change - 5 days ago
$599,000
Single Family Home For Sale
Active
3
BEDS
3
TOTAL BATHS
2,503
SQFT
1362 Braman Avenue
Fort Myers, FL 33901
Becklers Riverside Add Subdivision
$1,875,000
Single Family Home For Sale
Active
4
BEDS
4
TOTAL BATHS
4,684
SQFT
3232 Mcgregor Blvd
Fort Myers, FL 33901
Riverside Subdivision
$6,000,000
Single Family Home For Sale
Pending
5
BEDS
5
TOTAL BATHS
7,719
SQFT
2844 Valencia Way
Fort Myers, FL 33901
Lynns Add Subdivision
$479,000
Single Family Home For Sale
Pending With Contingencies
3
BEDS
4
TOTAL BATHS
1,784
SQFT
1414 Alhambra Dr
Fort Myers, FL 33901
Fort Myers Subdivision
$5,499,900
Single Family Home For Sale
Pending With Contingencies
5
BEDS
6
TOTAL BATHS
5,093
SQFT
3914 W Riverside Dr
Fort Myers, FL 33901
Fort Myers Subdivision
New Listing - 2 weeks online
$569,000
Single Family Home For Sale
Active
3
BEDS
2
TOTAL BATHS
1,903
SQFT
1353 Sunbury Dr
Fort Myers, FL 33901
La Chelle Manor Subdivision
New Listing - 6 days online
$1,150,000
Single Family Home For Sale
Active
4
BEDS
4
TOTAL BATHS
3,147
SQFT
1326 Cordova Ave
Fort Myers, FL 33901
Poinciana Park Subdivision
$519,000
Single Family Home For Sale
Pending With Contingencies
3
BEDS
2
TOTAL BATHS
1,802
SQFT
1520 Ricardo Ave
Fort Myers, FL 33901
Fort Myers Subdivision
New Listing - 3 weeks online
$199,900
Land For Sale
Active
0.19
ACRES
LEE
COUNTY
1461 Barcelona Ave
Fort Myers, FL 33901
Fort Myers Subdivision
Price Change - yesterday
$2,795,000
Land For Sale
Active
1.1381
ACRES
LEE
COUNTY
1301 Poinciana Ave
Fort Myers, FL 33901
Poinciana Park Subdivision
New Listing - 3 weeks online
$599,900
Single Family Home For Sale
Active
6
BEDS
3
TOTAL BATHS
2,925
SQFT
1473 Barcelona Ave
Fort Myers, FL 33901
Valencia Terrace Subdivision
$3,990,000
Single Family Home For Sale
Pending
4
BEDS
6
TOTAL BATHS
5,934
SQFT
1201 Carlene Ave
Fort Myers, FL 33901
Caloosa View Subdivision

 

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