REAL ESTATE – INVESTMENT – MARBELLA WOHNEN – The risks of real estate investment

The risks of real estate investment

Before investing in the real estate sector and growing our savings, we must know the risks that a real estate investment can carry, in this way we can evaluate and reduce them.

Let’s see what the risks are and how to reduce them.

What are the risks of investing?

We have to be clear that any investment involves a risk, but the idea is to know them to mitigate the risk. Some of the most frequent risks of investing are the following:

• The market fluctuates: it is important to know that the markets in general and the real estate market, in particular, can undergo changes as a result of various factors such as economic crises or variations in interest rates. As is happening now because of Russia’s invasion of Ukraine.
• Decrease in profitability: it may be that an investor has an asset that is very difficult to sell, for which he is forced to reduce the price, which implies a decrease in profitability.
• Problems when repaying the mortgages that we have requested: when bank financing is requested to buy a real estate asset, it is possible that, if your liquidity is reduced, you may have problems returning that money to the bank.
• Legislative changes: it may happen that a change in the country’s regulations modifies the circumstances and supposes less profitability.
• The increase in interest rates: market variations can come from the increase in interest rates, which means an increase in the monthly installment paid for a mortgage.

Reduce risks

It is difficult to predict the risks that we may face in a real estate investment, but we can reduce the risk with:

• Diversification: do not invest everything in the same type of property.
• Investing in assets that are less sensitive to market fluctuations.
• Carry out an exhaustive study before investing: from a legal, technical and financial point of view.

In short, it is about trying to have some security so as not to lose money in the future with the investment made.

If you have doubts, it is best to let yourself be advised by a Real Estate professional, a professional in the sector, trained and specialized in helping the buyer to choose the best investment.

How to stay up to date on real estate investment?

As with anything, the magic formula doesn’t exist. But the best way is to find out about real estate investments and nothing better than contacting us.

Marbella WOHNEN Immobilien

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