Although real estate is generally a low-risk form of investment, many people associate it with bad tenants or having to navigate the ebbs and flows of the economy. In truth, if you don’t have the time and the passion for it, then you might not make the best investment decisions, and that’s where the risk comes in. However, if you put in the time and effort, real estate investing can be incredibly safe and lucrative. If you’re not yet convinced, let’s take a look at the top three reasons real estate investing is worth the risk.
Often, one thing that holds people back from real estate investing is the idea of relying on one property for income. However, all experienced real estate investors know that portfolio diversification is the key to lowering risk. Investing in multiple properties means you don’t have to worry as much about certain risks, like one tenant not paying on time or a flood in a particular area. This allows you to achieve a much steadier cash flow, and if one investment goes under, you won’t be completely up the creek without a paddle.
While dealing with tenants may not scream “stability,” it’s actually quite the opposite. Most tenants are reliable and will pay you on time—most people don’t want to lose their homes. Additionally, there will always be a necessity for homes, regardless of what the market price might be from day to day, so you’ll never be out of business. The more you diversify your portfolio with other properties, the more stable and reliable the income flow will be.
If, for some reason, you decide you want to bail out, you can use a real estate investment strategy known as buy-and-hold. When you buy and hold, you don’t have to manage the property; you simply wait for the right time to sell it. Ideally, you’ll wait until the value goes up, and you may have to spruce up the property before a showing, but you can absolutely make your money back and more! This is a great option for first-time investors who realize they don’t want to be in the landlord business. All you have to do is wait for your tenants’ lease to be up and then sell the property to somebody else!
Ultimately, there are many other reasons real estate investing is worth the risk—these are just the top three. If you want more information on real estate investing or need some resources to help you get started, let Excalibur Homes help! We’re a Nashville property management company dedicated to helping experienced and beginner investors just like you.