Question

In: Finance

What are some ways to mitigate risk in Real Estate investing and why?

What are some ways to mitigate risk in Real Estate investing and why?

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Expert Solution

Hello,
Mitigate Risk in Real Estate Investing -
There are several ways to mitigate risk in real estate investing are

  1. Proper Due Diligence is done before investing in any property, checking all the legal documents.
  2. Don't Overpay - Be ensure that you do not ave to pay an extra amount of money. EX- if you buying an shopping center confirm about the prices per square feet.
  3. Know about real estate Cycle - Expansion, contraction, Recession, and recovery
  4. Focus on the multifamily rentals - Renting Multifamily properties is less risky than the single house property, because if the one portion is vacant other will be let out.
  5. Focus on the small appartments this will help in the recession time.
  6. Buy and hold strategy is one of the best way to mitigate risk.
  7. Always take a long term loan say 25-30 years, because if the interest rate low between you can repay the previous loan by taking a fresh loan.

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.


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