Risks of Sitting on the Sidelines

Not investing in real estate is a conscious decision. You are betting that your alternative decision will produce gains that exceed the gains you would realize if you chose to invest in real estate. Sitting on the real estate sidelines has similar risks as consciously choosing to invest in real estate.

Stop me if you’ve heard any of these phrases before: “real estate investing is too risky,” “we’re due for a real estate crash,” “what if a tenant doesn’t pay rent?” Real estate investing, like most other things in life, absolutely comes with risk. But, what if we turned some of these phrases and questions around: “can you afford not to invest in real estate?”

By not investing in real estate, you may be choosing to place money in a savings account. By not investing in real estate, you may be choosing to invest money in the stock market. These are choices that have risks, and impact your net worth.

There is risk with most of our traditional income sources. Whether it is stock market volatility, inflation, relying solely on W2 income, or simply choosing not to put your money to work for you.

For example, rampant inflation has many rethinking their cash on hand. If inflation is, let’s say 8% - meaning at its core that most things we purchase are becoming 8% more expensive - it is becoming clear to many what is happening to our cash. Choosing not to invest this cash has risks, including that cash becoming less valuable by the day, and our buying power decreasing.

Real estate, like most other things, has its risks. All of this is to say that there are always risks in life. But, real estate is actually a hedge against some of the foregoing. Here are just some of the reasons to invest in real estate now:

When making the choice of investing in real estate or otherwise, do so consciously and analyze potential results of each choice. You may be able to mitigate your risk by pairing real estate investing with other parts of your life and portfolio.