Serious risk in owning multiple properties?

[Yoni Weisbrod]

I see that it is a common goal for Buy & Hold investors to own several rental properties. Wouldn't having multiple mortgages expose someone to an excessive amount of risk?

Suppose there's a market crash, rental rates fall, house prices fall, and then paying a monthly mortgage payment could prove challenging (not to mention other risks, like unforeseen capital expenditures). This situation would be tough when you own one property - but wouldn't the issue be dangerously compounded with multiple properties?

I realize that people look for properties that are pretty much guaranteed to provide positive cash flow, but I just wonder how much risk is involved before I get started. Is building wealth through real estate risky, plain and simple?

(New member warning!)

[Russell Brazil]

You are actually looking at it from the wrong angle. It is LESS risky to own multiple properties than it is to own one.  Diversification decreases risk, whether in real estate or in stocks.  Owning multiple assets in an asset class spreads your risk out over those assets.  Take for example if you own one property and it is vacant. You have 100% vacancy.  Gee better hope you can float that mortgage. But if you own 10 properties and have one vacancy, you only have 10% vacancy....which is much easier to absorb with the other 9 properties throwing off profit.