The Risk of Real Estate Investment (I)

In the process of real estate investment, investment risks are numerous and complex, and there are mainly the following:

(1) Market competition risk. It refers to the excessive supply of similar properties in the real estate market, fierce marketing competition, and ultimately bring the real estate investors such as houses unsalable risks. The emergence of market risk is mainly caused by the lack of analysis of market research by developers, and it is the lack of ability to grasp the market. Sales risk is the main risk of market competitiveness. tinplate

(2) Purchasing power risk. It means that people’s purchasing power declines due to the rise of the overall price level. In the case of a certain level of income and a general decline in the level of purchasing power, people will reduce the consumption demand for real estate goods, which will lead to a loss of real estate investors’ sales or rental income, thus causing certain losses.

(3) Liquidity and marketability risk. Firstly, since the real estate is fixed on the land, the completion of the transaction can only be the transfer of ownership or use rights, and its entity cannot be moved. Secondly, due to the large amount of real estate and the large amount of capital, it takes a long process to complete the real estate transaction. These have affected the liquidity and marketability of real estate. That is, real estate investors can’t abandon their real estate as soon as they need cash. Even if abandon, they can’t get a reasonable price, it will greatly affect their investment income, so brings the real estate investors realization earning risks.

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