Real Estate Investing - Risk vs Reward

[Kate Barry]

The reason that real estate to me is the best investment especially for someone just starting out with investing capital is because of the amount of control and risk management you can exercise on that investment.

You have little to no control over a stock once you purchase it, you can do your due diligence before hand on the company but then its out of your hands. With real estate the control only really comes after you purchase it. You control nearly every aspect of that asset except for market volatility, a risk that also can be mitigated as long as the property can sustain itself through a down market. Multi family properties are the only asset that does not have to be lost should the market crash - this risk can be mitigated by making sure the property can pay for itself from day one, not based on future market or rent projections (this is a red flag I am seeing now)

How do I manage the risk of a real estate investment?

** Perform diligence prior to purchasing (inspections, appraisals, title search, after-repair value, current expenses, current revenue, projected revenue (market value), etc.

**Take the time to learn how to invest in real estate (podcasts, books, Reality TV shows, TikTok, online forums, real estate networking groups, talking to your favorite local Realtor, etc.

**Have clear and meaningful goals with that investment (providing good stable housing, planning for retirement, creating generational wealth, safety and stability for mental health, tax strategies to keep more of what you earn, etc.)

Let's keep this going - what are the other risks and rewards in regards to real estate investing? 

[Carlos Valencia]

Hi Kate great points you made above. I also think that understanding the risk before buying real estate is something an individual needs to analyze and understand before jumping into it. I do agree that real estate investing is probably the somewhat safest investment that investing in stocks. When you invest in real estate you have some control over your purchase and weather you decide to live in it or have it as a rental property thats up to the individual. As long as someone does their research and runs the numbers the majority of the time you'll be ahead from where you started. Theres appreciation on the property interest rates may drop. Rents may go up. Theres many things that will allow you to walk away with making some money from your return. I would agree that Real estate investing is the best investment. 

@Albert Bui

@Matthew Kwan