Risks Involved in Real Estate Investment
Apr 18, 2017 Real Estate News
It is a widespread belief among investors that real estate is one of the safest sectors to invest one’s hard earned money. People tend to believe that property investment never really brings you monetary losses. Property prices always increase after a certain period of time making way for hefty returns to the investors.
People generally purchase properties at the nascent stage of their development in cheap prices and then wait for two to three years before selling them at higher rates to make money out of the investment. Although it sounds like a secure plan, real estate investment has its share of risks. The risk factor in real estate generally increases during the market slowdown. So it is important for an investor to analyze all the risks involved before investing his hard earned money in a property.
This article aims to enlighten you about the risks involved in real estate investments:
1. Investing in commercial properties: It is considered safe to invest in commercial projects which involves shopping centres, office spaces, service centres to name a few. Commercial properties are comparatively more stable than residential properties and provide good returns in terms of rents and security deposits.
2. Location and age of the property: When it comes to investing in real estate, location is one of the most important parameter to be considered before closing any deal. People always look for a property which is built around excellent social and physical infrastructure. Even a very old property in one of the prime locations of the city can provide you hefty returns in the future. On the other hand, an old and aged property will always cry for maintenance and you may end up spending a lot of money taking its care.
3. Waiting for property prices to increase: As discussed earlier, investors at least hold the property for a couple of years for its prices to increase so that they can make maximum profits by means of selling the same. However, there is no guarantee that the rates would increase as expected. In these times of market slowdown, real estate builders are offering attractive discounts on properties in order to get rid of piled up inventory. So it is always a risk for an investor waiting for property prices to increase.
4. Foreclosed properties: Investing in foreclosed properties involves highest returns and risks at the same time. People are generally wary of investing in such properties due to various risks involved. Experts suggest to go through all the terms before investing in foreclosed properties.
People generally purchase properties at the nascent stage of their development in cheap prices and then wait for two to three years before selling them at higher rates to make money out of the investment. Although it sounds like a secure plan, real estate investment has its share of risks. The risk factor in real estate generally increases during the market slowdown. So it is important for an investor to analyze all the risks involved before investing his hard earned money in a property.
This article aims to enlighten you about the risks involved in real estate investments:
1. Investing in commercial properties: It is considered safe to invest in commercial projects which involves shopping centres, office spaces, service centres to name a few. Commercial properties are comparatively more stable than residential properties and provide good returns in terms of rents and security deposits.
2. Location and age of the property: When it comes to investing in real estate, location is one of the most important parameter to be considered before closing any deal. People always look for a property which is built around excellent social and physical infrastructure. Even a very old property in one of the prime locations of the city can provide you hefty returns in the future. On the other hand, an old and aged property will always cry for maintenance and you may end up spending a lot of money taking its care.
3. Waiting for property prices to increase: As discussed earlier, investors at least hold the property for a couple of years for its prices to increase so that they can make maximum profits by means of selling the same. However, there is no guarantee that the rates would increase as expected. In these times of market slowdown, real estate builders are offering attractive discounts on properties in order to get rid of piled up inventory. So it is always a risk for an investor waiting for property prices to increase.
4. Foreclosed properties: Investing in foreclosed properties involves highest returns and risks at the same time. People are generally wary of investing in such properties due to various risks involved. Experts suggest to go through all the terms before investing in foreclosed properties.
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