What are the Risk Factors for Real Estate Investment? How to Prevent Them?

Real estate investment is one of the best ways to make money and build wealth with many benefits of buying and owning investment properties and earning passive rental income. But investing involves risks and rewards – and usually the higher the risk, the greater the potential for significant gains and losses of invested equity. Intuitively, we understand that it is necessary to take more investment risk in order to achieve higher returns. But how much is appropriate? And how can you quantify investment risk to figure out if it is a chance you want to take?


The fact that a person buys physical properties gives many investors a level of comfort. Yet there are many risks involved in commercial real estate investing that must be considered in conjunction with the expected value of the investment.


1- General market risk, as all markets have ups and downs tied to the economy, interest rates, inflation, or other market trends.


2-Hidden Structural Problems In real estate investing, a property investor might end up buying an investment property with serious hidden structural problems, which increases the chances of facing unexpected repairs and maintenance costs.


3- Bad Locations, as First, location determines the supply and demand, also investment appreciation. Low appreciation means the negative return on investment when the property investor decides to sell an investment property. Thus, never buy investment properties based on price alone!


4- Liquidity risk. Taking into consideration the depth of the market and prepare previously an appropriate exit plan, the investment needs to be considered before buying.


5-Credit risk. The length and stability of the property’s income stream are what drives value. Also, even the most creditworthy tenants can go bankrupt!


To prevent these risks, real estate investors should inquire about these risks, make the appropriate studies, and receive straight answers to be more confident in their investing decisions. Be aware of any investment opportunities that do not make all the details clear.

In property Invest our real estate consultants provide you with all the details needed to make you feel comfortable during your investment process in Turkish real estate and help you to make the best and sustainable investment


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