With the stock market continuing to punish most of us who dare to take it on, a number of people are considering Real Estate as a better alternative to park their cash. The first step in choosing an investment is to identify your individual tolerance of risk. As the saying goes, the greater the risk, the greater the reward and it’s important to understand that the two go hand in hand. In other words, without risk, there is no reward. The first question you must ask yourself is how much loss can you handle? You shouldn’t be investing in Real Estate or anything for that matter without first being prepared for the worst case scenario. Will your Real Estate investment be shut down if the worst were to happen, or will you be able to weather the storm? The market ebbs and flows and you need to be prepared for the worst. It’s not to say that you can’t make instant profit as many people do every day, but it’s imperative you run ‘the deal’ through the ‘what if this were to happen’ lens. As with most other investments, Real Estate can have varying levels of risk and various levels of reward. It’s important to identify how much risk you want to take on, so you can know what type of property types to start looking for.
Your next step is identifying a property that fits your risk tolerance!