Commercial & Residential Properties in BC & Alberta

Keep Up to Date: Yarmoloy Group's Guide to Recognising and Resolving Real Estate Investment Risks

One of the main concerns of investors, especially first-timers, is a risk. The fear that the operation will not go well can hold back some investments. And, although it is true that the real estate market is a safe value for investment, it is not without some risk. Of course, there are some keys to reducing the risks of a real estate investment to the maximum. Do you want to know what they are?

If you are thinking of investing, first of all, as Yarmoloy Group experts have already told you in this post, it is convenient that you ask yourself some questions. For example: what is the objective of the investment? How much risk do you intend to take?

It is possible that in this decision-making process you opt for a real estate investment. An option that has always been interesting but that, at a time of crisis like the current one, has become a refuge asset and has numerous advantages.

And it is that real estate investment offers some advantages that differentiate it from other types of investments. For example, security, its low difficulty, the limited time of dedication that it requires, or its profitability.

Things you should not overlook if you want to make a real estate investment with minimal risk

Although it is a simpler option than others, there are a number of aspects that should not be ignored if you want to reduce the risks of a real estate investment. For example, before embarking on such an operation, there are four things to keep in mind:

  1. Do a preliminary internal analysis. This means, for example, evaluating the capital we have and analyzing the different types of investment. Only in real estate, there are many options: are you going to buy a new apartment? A profitable property? Studying all the options well to see which one best suits your investment needs is an essential step before making any investment.
  2. Search for properties and review all the details. Today the search process is much simpler than it used to be. The digitization and democratization of the use of real estate portals make the search for the perfect investment much easier. So, take advantage of the opportunities that technology offers and spend time looking for properties and studying all their pros and cons: the condition of the property, the location, whether or not it needs renovations, etc.
  3. Study the expenses and income of the investment. If, for example, you are going to buy a home, there are a series of expenses that you must take into account. Likewise, you must analyze how the investment is going to be recovered and what the expected deadlines are.
  4. Do not be impatient. An essential piece of advice to reduce the risks of a real estate investment is to avoid rushing. Take your time to plan everything well, look for good opportunities and close the operation in the most optimal way.

Tips to reduce the risks of a real estate investment

Apart from these tips that will help you in the preliminary and search process, there are other tips that will help you reduce the risks of a real estate investment:

  1. Take advantage of the rental benefits. A very frequent and advisable option to take advantage of an investment in real estate is renting. It is a way to guarantee stable and continuous income that allows profitability.
  2. Avoid the vacancy. In relation to the lease, there is a concept that should not be overlooked: the vacancy. This term refers to the time it takes to rent a property and during which it generates expenses, but not income. Like, for example, as taxes, supplies, community, etc. In addition, the cost of having an empty house will increase with the new housing law.
  3. Hire the necessary insurance. Having the right insurance policies will help reduce the risks of a real estate investment. For example, having rental housing insurance protects against possible defaults or intentional damage.
  4. Diversify your investments. If you have the possibility, it is preferable that you distribute your capital destined for investment in different properties. In this way, if for some reason there is a property that is not generating the expected profitability or even generates some losses, it will not be reflected in such a pronounced way in the global calculation.
  5. Leverage your investment. In order to facilitate diversification, leverage can be very useful. Thanks to it, resources can be more easily distributed among several investments.
  6. Control expenses. If, for example, you need to make reforms, it is convenient that you value all the options well, control the expenses that they are going to entail, and have them contemplated in your investment plan.

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