- May 14, 2019
- Real Estate
While real estate represents a reliable investment option for investors to drive sizeable long-term returns; like all other investment options, real estate too, isn’t free from risks. Investors must make informed decisions to avoid pitfalls and potential losses. That is when the need of a team of experienced real estate fund managers, such as Fig Tree Capital Ventures, becomes clear. It is, however, important for you to be aware of potential real estate investment risk factors. To help clear the smokescreen, in this blog post, we answer some commonly asked questions about the risk factors in real estate investments. Read on.
1. What are the top risks in real estate investments?
Picking a bad location, unpredictability of the market and lack of liquidity are the top real estate risk factors. While not much can be done about the market unpredictability, you can up your defence against the risk of choosing a bad location or property by partnering with an experienced real estate fund management firm such as Fig Tree Capital Ventures. Investing in the opportunities curated by our seasoned fund managers helps ensure optimum returns and reduced risks.
2. Do rental properties assure guaranteed returns?
One of the most common misconceptions in the real estate industry is that rental properties provide guaranteed returns. Many new investors think of rental income as one of the top money making avenues of real estate investments, which, though potentially true in some cases, has a few grey patches. Rental properties come with a myriad of problems, such as bad tenants, late rental payments, and lack of occupancy. We cannot call rental properties to be risk free or a guaranteed source of income.
3. Are there any hidden risks that are commonly overlooked?
By far, one of the most overlooked risks of investing in real estate is the possibility of a negative cash flow. One must be careful in assessing the market, mortgage rates and tax rates before putting their money down on a property. Sometimes, a host of conditions pop up after buying a property that put you in a negative cash flow. One can land in such a situation if the rental income of their property is less than the sum of mortgage payments, taxes and repairs.
4. How grave is the risk of depreciation?
Depreciation in real estate is real. Investing in a property without a comprehensive real estate risk analysis can lead you to losses. In most cases, properties are expected to appreciate over time. However, poor choices in the location, hidden structural problems in the property and changes in economy can lead to depreciation. As your investment partner, Fig Tree Capital Ventures leaves no stone unturned to ensure your money is invested in properties potentially more immune to depreciation.
Every investment option comes with a set of pros and cons and the same is true for real estate investments. Poor choices and lack of informed decisions in real estate investing can expose you to a great number of risks and potential losses. If you are an accredited investor or high net-worth individual looking to venture into the realm of real estate investments, Fig Tree Capital Ventures is here to help. To learn more about your real estate investment opportunities, simply call (866) 300-1885, or fill out our contact form and we will take it from there.