It’s no secret that real estate investment comes with a certain amount of risk. But is it really any more risky than other types of investments? Here’s a look at some of the risks associated with real estate investing and some tips by William Schantz on how to mitigate them.
Tips on Mitigating the Risks of Real Estate Investments
The Market Could Crash
According to William Schantz, this is perhaps the biggest risk when it comes to investing in real estate. If the market crashes, prices could plummet, and you could find yourself owing more on your investment property than it’s worth.
There are a few things you can do to protect yourself against this risk. First, make sure you diversify your portfolio by investing in different types of property in different markets. This way, if one market crashes, you’ll still have other investments to fall back on.
You should also make sure you’re not putting all of your eggs in one basket by investing too much of your money into one property. A good rule of thumb is to never invest more than 10% of your total portfolio in any one investment.
You Could Owe More Than the Property Is Worth
If you’re not careful, it’s easy to get in over your head when buying an investment property. If you take out a loan to purchase the property, make sure you don’t borrow more than 80% of the purchase price. This will help ensure that you have some equity in the property if the market crashes and prices start to decline.
It’s also important to make sure you’re not overpaying for the property. Be sure to do your research and know what similar properties in the area are selling for before making an offer.
You Could Have Trouble Finding Tenants
William Schantz believes that if you’re investing in a rental property, one of the risks you face is having trouble finding tenants. This can happen for a number of reasons, such as if there’s a downturn in the economy or if there’s an overabundance of rental properties in the area.
To mitigate this risk, it’s important to do your homework before purchasing a rental property. Make sure you’re buying in an area that has strong job growth and is in high demand from renters. You should also make sure you’re pricing your rental property competitively.
Maintenance and Repair Costs Can Be High
Another risk you face as a real estate investor is high maintenance and repair costs. If you’re not prepared for these costs, they can eat into your profits or even cause you to lose money on your investment.
To avoid this, it’s important to have a realistic budget for maintenance and repairs before you purchase an investment property. Be sure to factor in the cost of regular upkeep, as well as the cost of any major repairs that may be needed down the road.
Investing in real estate will always be risky, but William Schantz has given you the know-how on protecting your real estate investments. By being aware of the risks and taking steps to protect yourself, you can minimize your chances of losing money.