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What is Credit Risk?
Do real estate investors incur credit risk? If you are on the lending side of a real estate deal, then yes, you’re likely taking on credit risk. But what about investors buying properties or investing in real estate funds?
Why is Risk an Important Consideration When Investing?
Without risk, there can be no return. This is the unfortunate relationship between risk and return. Investors who seek out a higher return will usually be met with higher risk. Those investors who want a lower risk investment may also have to settle for lower returns.
What is Asset-Level Risk?
Asset-level risk analyzes risk associated with a specific property. This analysis isn’t just about the property and its investment structure. Asset-level risk also involves the surrounding properties and various local economic trends. No analysis is complete without factoring in general market risk as well. In this article, we’ll go over in detail what asset-level risk is and the type of analysis needed to help quantify and identify risk at this level.
How to Calculate Liquidity Risk?
Real estate isn’t known for its liquidity. But what is liquidity, and why should real estate investors care? Liquidity is the ability to discover the current market price of an asset and immediately convert the asset to cash at that price. To discover the current market price, buyers and sellers need to be readily available at that price. Real-time price discovery allows an investor to convert their asset into cash. There are many levels to that statement. In this article, we’ll unpack them and go through why we think it is important to consider liquidity risk.
What is General Market Risk?
General market risk is one of the most macro levels of risk that a real estate investor can assume. Market risk is made up of the economic and financial cycles within an economy. At Realized, we consider market risk to have nine specific components, which we’ll go over in this article.
What is Entitlement Risk?
Entitlement risk is often associated with new development, but it also occurs with property conversions. It can present a number of surprises and can be a very time-consuming process. When entitlement risks are involved, there’s no guarantee that a project will even be successful. In this article, we’ll go over what entitlement risk is and the challenges that it presents to real estate investors.
Who Uses Portfolio Management?
Accredited investors and other high-net-worth individuals often use professional money managers to help them build diversified portfolios that not only meet their tolerance for risk but also can withstand cyclical downturns in the economy.
What is Portfolio Management?
Unsophisticated investors are all too often married to the stock widgets on their iPhones. Their mood can be determined by the red (negative) or green (positive) updates that dictate the performance of their investment portfolios.
What is Liquidity Risk?
Real estate investors know that if they buy a property then turn right around and sell it, they’re likely to take a fairly large loss on the property. In addition to market conditions, liquidity plays a big role in the buy-and-hold nature of real estate investing.
How Can You Manage The Risks From Your Investments?
Investing is a bit like betting on sports -- it’s a game of probabilities. Positive outcomes are never guaranteed, even in times of economic boom and national prosperity.
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