Part 2 of The Basics of Real Estate Investments
In this part we are focusing on the risks of real estate investments and what is important to be prepared of.
First and foremost it is important that you check the level of risk.
Generally there is a connection between risk and the level of yield, in other word, the higher the risk, the higher the yield. So, how does the risk look for the specific project which interests you, compared to the potential yield it can give?
Something that is even more important than that: How’s the risk in relation to your current life situation? Is it money that you can afford to lose, then you can go for higher risk with higher yield.
It is important to take all sides in consideration in your research, in preparation for a potential investment.
Second of all, you need to make sure the company delivers.
This means that you do the research of the company itself, what experience do the have? Do the have the qualifications to complete the project?
This is part of the Due-Diligence which we at Fundmatchers do for each of the company that wishes to publish their projects on our platform.
However, it is important that you as a potential investor do your own research about the company and create your own image around it.
It is also a good idea to check how big part of the project that is being financed by the company. A high capital structure, means a higher level of risk, since the company can get issues with finances in case of a recession.
In coming posts we are going to dive deeper in to the different parts of real estate investments, so keep your eyes peeled.
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