Investing in Real Estate - Is It Too Risky?

The reality of life is that most things we do have a good and a bad side to them.  Investing in real estate isn't any different.  There are things that can go wrong, and that's a risk you take.  But there are plenty of things that can go right, too.  And the best thing about the risks is that with some planning and preparation, most of those risks aren't going to do you any harm. 

One of the things I've always liked about real estate is that I'm providing someone with a home.  I remember selling a house to an older lady using a 'rent to own' arrangement.  She was so excited about being able to have her own home, and four years down the track she still tells me how she and her family spent their first Christmas in her home, talking about how I was an angel sent to help them.  Now, maybe that's a bit of an extreme case, but it certainly gave me the inspiration to go on and buy more houses, even when I didn't seem to have any way of moving forward.

Real estate investing is only going to be for you if you throw yourself into it and get started.  One of the biggest risks is that you'll spend countless thousands of dollars learning about what to do, then never doing it.  I've seen so many people talk in a big way about they're going to make a fortune in real estate, only to keep waiting for the 'right' deal to turn up on their doorstep.  Until they take action, even if it's with a deal that only rates as okay, they're going to stay stuck.

Of course, the flip side of this is people who jump in feet first and don't even stop to check that the property they're buying is even an okay deal!  Not doing any research, or buying properties without having a clear goal in mind, are two of the best ways I know to end up with a portfolio full of duds.  If you even manage to get past the first one.  There are a lot of houses out there, and you don't need to buy the first one you see, just because it's there.  Take your time, work out your strategy, know what you want to do with the house - and then go and find a house that fits your criteria.

Another favorite of mine is insurance.  Believe me, if you want to sleep at night, then find the money and insure your properties.  If you have tenants, insure for anything that might happen with them too.  It's amazing how much less you worry, when you know that if the renters trash the place and run off, you're covered.  I'd also suggest that getting a fixed interest rate on your loan can be handy if you're worried about the risk of interest rate rises.

In the end, I could sit here and write an endless list of risks that you might encounter in real estate investing.  But the truth is, you probably won't.  And even if you do, by being prepared, having insurance, and perhaps a bank account with some cash you can access in a hurry for emergencies, you'll soon discover that the risks aren't as big as people try to tell you they are.  Knowing what can happen and being prepared in advance makes it all a lot easier.