Ordinary individuals often ask- how risky is a real estate investment? Since 2013, real estate has ranked first among the most popular investment options for most Americans (35%), according to the annual survey on Economics and Personal Finance conducted by Gallup in early April 2020. Therefore, in the list of most preferred investments, real estate is ahead of stocks and mutual funds (21%), savings accounts (17%), gold (16%), and bonds (8%). For many people, real estate is a great investment choice. Like any other investment, real estate involves certain risks. Let’s have a look at some risks and solutions detailed here below:
- The Real Estate Market Is Highly Unpredictable
In the run-up to the 2008 financial crisis, many investors mistakenly believed that the real estate market could only move in one direction: up. The consensus was that you could sell it later for much more money tomorrow if you bought a property today. Although property values usually increase over time, the real estate market is unpredictable. Your investment may be worthless. Remember that supply and demand, the economy, demographics, interest rates, government policies, and unforeseen events (such as COVID-19) all have some impact on real estate trends, including prices and rents. You can reduce the risk of being on the wrong side of the trend by conducting thorough research, due diligence, and continuous monitoring of your properties. Many companies buy houses at appropriate price tags. We buy houses in Greenbrier, Arkansas, and give the pre-agreed cash to sellers soon after the deal. Experts evaluate properties keeping different things in mind and keep you safe from various risks.
- Poor Location
While looking for a house, buyers always consider its location before making a final decision. After all, people can’t move their homes to a more promising neighborhood. Location ultimately determines your ability to make profits by selling a house. Even if your house is not situated at the ideal location, don’t get worried at all. We buy houses in Bryant, Arkansas. We will buy your home at a reasonable price tag regardless of location. You will be able to get instant cash soon after the deal.
- Negative Cash Flow
Remember that cash flow from real estate investments is the money that remains after all expenses, taxes, and mortgage payments are paid. Negative cash flow occurs when the amount of money coming in is less than the amount going out, meaning you lose money and don’t make a profit on your investment. We take note of it and make several competitive offers to home sellers. You can choose the best offer and get the required cash soon after the deal. In general, the main reasons for negative cash flow are:
- A high proportion of vacant space.
- The service cost is too high.
- High financial costs.
Cash home buyers make the pre-purchase review to reduce adverse cash flow risk. They take time to calculate all real estate transaction expenses and act accordingly.
- Unoccupied Areas
Whether you own a single-family home or an office building, you need to claim your property in full. Unfortunately, there is always the risk of a high share of unoccupied space, which means you can get a negative cash flow. A high percentage of unoccupied space is especially dangerous if you rely on the income through a real estate transaction. We take care of all these when you sell your house. You don’t have to worry about property taxes, maintenance, mortgages, etc.
- Hidden Structural Problems
If your house has hidden structural problems, selling it at a reasonable price tag is always tricky. In the case of a typical single-family home, you need to spend a considerable amount of money on its repair and maintenance. We buy houses in all conditions. In this way, you can save thousands of dollars.
- Shortage of liquidity
If you invest in stocks, you can quickly sell them to get the required cash. In the case of a real estate investment, the situation is quite different. Owing to a lack of liquidity, you may end up having to sell your property below market or at a loss if you need the money quickly. There are different ways to use your property’s value if you need the cash. We evaluate your property, keeping different things in mind, and make the best offers as far as possible.
Traditionally, real estate is considered a safe zone for income (buying a property at a lower price and selling it at a high price tag). An experienced investor gets passive income from it with excellent profitability, tax advantages, diversification, and the opportunity to accumulate capital. However, such deals can be risky. You can limit risks by working with a cash home buyer. Their experts will conduct a comprehensive expert review, market analysis, and property analysis.
