Assessing Risk in Real Estate

Unlike the equities markets there is no universally accepted risk assessment tool or metric for real estate investors. Therefore, quantifying risk is not as straightforward. In fact many investors focus on returns and essentially ignore risks. 

We won’t be able to cover everything in a two minute newsletter, but here are some topics to look into (and possible topics for future tips of the day! Let us know.).

Risk Categories

• Market Risks

• Property Specific Risks

• Regulatory/Legal Risks

• Financial Risks

Risk Assessment

Begin with the question, “What can go wrong?” at every possible juncture. Then consider the probability of it happening and severity if it does. This exercise may be tedious at the beginning but could save you later on.