--- title: How to Use Risk to Manage Real Estate Investments description: Learn more about ways you could use risk to manage real estate investments. image: https://www.realized1031.com/hubfs/how%20do%20interest%20rate%20risk%20and%20reinvestment%20risk%20interact%3F-1192368502.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # How to Use Risk to Manage Real Estate Investments Posted Dec 21, 2022 ![how do interest rate risk and reinvestment risk interact?-1192368502](https://www.realized1031.com/hs-fs/hubfs/how%20do%20interest%20rate%20risk%20and%20reinvestment%20risk%20interact%3F-1192368502.jpg?width=750&height=392&name=how%20do%20interest%20rate%20risk%20and%20reinvestment%20risk%20interact%3F-1192368502.jpg) This article was written by Realized Founder and CEO David Wieland and originally appeared on MarketWatch. You can find the full article [here](https://www.marketwatch.com/story/how-to-use-risk-to-manage-real-estate-investments-like-you-do-with-your-stock-portfolio-11615423830). In our experience, [real estate investment properties](https://www.realized1031.com/glossary/real-estate-investment) aren’t typically managed with the same discipline as traditional asset classes. Generally accepted and standardized measures of traditional asset risks don’t exist in real estate, and there is no framework for evaluating real estate risk. However, there are risk attributes with which you should familiarize yourself.   ### Understanding risk factors If you receive an investment opportunity as an independent real estate investor, you may lack access to public data like you have with other asset classes to help you determine risk. That’s why we feel it’s important to work with a knowledgeable adviser and also understand these critical factors for assessing an investment property: - General market risk  - Real estate market risk  - Geographic risk  - Property-specific risk  - Structural risk - Liquidity risk ### Evaluating real estate risks If you understand the risks associated with real estate investment, you can gain a clearer picture of how to manage real estate wealth in a similar way to how you manage other investment portfolios.  In some markets, you can compare the credit of two companies in two completely different sectors based on a standardized set of metrics. Similarly, you can evaluate commercial real estate by quantifying the [cash-flow](https://www.realized1031.com/glossary/cash-flow) risks of two different properties in two different locations.  In that respect, you would measure the projected returns and the likelihood of those returns against the risk you are willing to take.  Just as a wealth manager would purchase different asset classes to create a non-correlated and diversified portfolio by standardizing the way we look at risk, real estate investors can build portfolios of commercial and residential real estate that take into account overall after-tax returns.  By delving deep into risk and considering the correlations between different property types, you can manage real estate investments with the same sophistication as traditional asset classes — helping to bridge the gap between real estate and wealth management.  *This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.* *Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.* *Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.* *There is no guarantee that the investment objectives of any particular program will be achieved. All real estate investments have the potential to lose value during the life of the investment.* *The actual amount and timing of distributions paid by programs is not guaranteed and may vary. There is no guarantee that investors will receive distributions or a return of their capital. These programs can give no assurance that it will be able to pay or maintain distributions, or that distributions will increase over time.* Discover Ways To Help Manage Risk In Your Investment Portfolio [![Discover Ways To Help Manage Risk In Your Investment Portfolio](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Risk-ebook-250.png?width=250&height=250&name=IPWM-Risk-ebook-250.png "Learn more about how to ...") ](https://www.realized1031.com/blog/how-to-use-risk-to-manage-real-estate-investments#blogform) Download eBook ---   --- ### Discover Ways To Help Manage Risk In Your Investment Portfolio ![Discover Ways To Help Manage Risk In Your Investment Portfolio](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Risk-ebook-550.jpg?width=550&height=650&name=IPWM-Risk-ebook-550.jpg) Learn more about how to incorporate real estate investments into your risk management strategy By providing your email and phone number, you are opting to receive communications from Realized. 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("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. 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For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "This article was written by Realized Founder and CEO David Wieland and originally appeared on MarketWatch. You can find the full article here. In our experience, real estate investment properties aren’t typically managed with the same discipline as traditional asset classes. Generally accepted and standardized measures of traditional asset risks don’t exist in real estate, and there is no framework for evaluating real estate risk. However, there are risk attributes with which you should familiarize yourself. Understanding risk factors If you receive an investment opportunity as an independent real estate investor, you may lack access to public data like you have with other asset classes to help you determine risk. That’s why we feel it’s important to work with a knowledgeable adviser and also understand these critical factors for assessing an investment property: General market risk Real estate market risk Geographic risk Property-specific risk Structural risk Liquidity risk Evaluating real estate risks If you understand the risks associated with real estate investment, you can gain a clearer picture of how to manage real estate wealth in a similar way to how you manage other investment portfolios. In some markets, you can compare the credit of two companies in two completely different sectors based on a standardized set of metrics. Similarly, you can evaluate commercial real estate by quantifying the cash-flow risks of two different properties in two different locations. In that respect, you would measure the projected returns and the likelihood of those returns against the risk you are willing to take. Just as a wealth manager would purchase different asset classes to create a non-correlated and diversified portfolio by standardizing the way we look at risk, real estate investors can build portfolios of commercial and residential real estate that take into account overall after-tax returns. By delving deep into risk and considering the correlations between different property types, you can manage real estate investments with the same sophistication as traditional asset classes — helping to bridge the gap between real estate and wealth management. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. There is no guarantee that the investment objectives of any particular program will be achieved. All real estate investments have the potential to lose value during the life of the investment. The actual amount and timing of distributions paid by programs is not guaranteed and may vary. There is no guarantee that investors will receive distributions or a return of their capital. These programs can give no assurance that it will be able to pay or maintain distributions, or that distributions will increase over time.", "articleSection" : [ "Risk" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2022-12-21T18:00:00+0000", "datePublished" : "2022-12-21T18:00:00+0000", "description" : "Learn more about ways you could use risk to manage real estate investments.", "headline" : "How to Use Risk to Manage Real Estate Investments", "image" : { "@type" : "ImageObject", "height" : 392, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/how%20do%20interest%20rate%20risk%20and%20reinvestment%20risk%20interact%3F-1192368502.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/how-to-use-risk-to-manage-real-estate-investments", "name" : "How to Use Risk to Manage Real Estate Investments", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/how%20do%20interest%20rate%20risk%20and%20reinvestment%20risk%20interact%3F-1192368502.jpg" } ```