Risks In Real Estate Investment – A Flawless Framework to Analyse and Understand Risk

Risk is the possibility of something bad happening. You don’t make enough return or you lose some or all of your investment.

Debt Does Not Equal Risk – We use financial leverage with real estate because lenders see it as a safe investment, and it accelerates the returns for the investor. But it also scares many investors away. Watch my #1 Thing That Stops You From Buying Real Estate video to help!

Here is the risk framework:

  • What could happen? – The bad thing
  • What is the cause?
  • Are there any indicators?
  • What is the probability of it happening?
  • What is the impact if it does happen?
  • What is the mitigation?

Watch as I use this frame to look at:

  • What if Interest rates increase?
  • What if I can’t rent?
  • Unexpected repairs and costs
  • What if I have problem tenants?

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