Summary: Risks are inevitable in investing — but with the right knowledge, strategies, and team, you can create lots of passive income while mitigating risks that other investors will all face. Let’s get to learning!
We’d like to start off with a quote from one of our FAVE books ever…
“My poor dad often said, ‘Investing is risky.’ My rich dad said, ‘Being financially uneducated is risky!’ – Rich Dad Poor Dad, by Robert Kiyosaki.
This perrrrfectly sums up what we’re chatting about today. You see, so often we meet people who are terrified to invest their hard-earned money. They fear the risks, and we don’t blame them at all.
Because the truth is, investing CAN be very risky…depending on where and how you invest.
And we believe it’s good to become familiar with what all the risks are before putting money into any investment strategy. But not all investments are the same, which means neither are the risks involved.
We have a friend who loves the idea of shooting the moon with a big, fast, jackpot type of investment.
And honestly…who doesn’t love the idea of that? 😂😂
The idea is lovely. It’s the execution that pretty much never works out. It is possible for an investment to be too good to be true. The thought of the super high return gets overestimated, and the possibility of super high losses gets underestimated.
And unfortunately, the losses in a “get rich quick” deal can sometimes be disastrous. And we don’t want that for you.
There are investment risks that are worth taking, and some that just aren’t. The difference is in the details – the knowledge, research, strategy, and team behind your investments.
It is possible to lower your risk substantially by putting a bit more time and effort into your investment decisions.
What our friend (and many others like him) overlook in their desire to win the next big jackpot, is the possibility of 100% return in 5 years of multifamily apartment syndication. It takes a little patience and due diligence, but we’re about to show how apartment syndication can help mitigate investment risks and grow your income like crazy. 🤩🤩
Here’s what we’re covering today:
- What are some of the risks of real estate investing?
- How to mitigate risk with apartment syndication.
What are some of the risks of real estate investing?
This Thomas Jefferson quote always comes to mind when we think about risk: “With great risk comes great reward.”
Now, he wasn’t wrong… but we try not to take this phrase too literally when it comes to investing. Because obviously, yes. We want to maximize the return on investments as much as possible. But you don’t want to just look for the riskiest opportunity you can find.
Instead, you want to find the highest possible return for the least amount of risk. Trust us on this…no reward is worth losing ALL your savings and messing up your future.
3 common real estate investing risks to be aware of
So, knowing that there is always some level of risk in investing, let’s look at 3 common risks to be aware of.
When you know what to expect, you can better manage expectations AND build the right knowledge to lessen potential risks.
1️⃣ Less money coming in than going out
This is one the biggest concerns of real estate investing (orrr investing of any kind, really). Having a negative cash flow would be a huge bummer if your goal is to actually INCREASE your wealth.
Negative cash flow happens when the expenses of owning and managing a property become higher than the income of monthly rent.
It’s important to know that some things are out of your control. But for the most part, things like tenant issues and property damage can and should be planned for, so they don’t take you by surprise.
2️⃣ Market unpredictability
The real estate market is always changing, which can make some people uneasy about investing. Maybe you get in at an opportune time, but the market changes or unforeseen events happen (here’s looking at you, 2020 👀), and your property unexpectedly depreciates.
The unpredictability of the real estate market is the main reason why simply putting your money into aaaany sweet-sounding deal is not the way to go.
We all get caught up in the excitement of the perfect scenario from time to time. But knowing that life doesn’t always play out the exact way we expect is a great first step in safeguarding your investments.
3️⃣ Tenant problems and possible vacancies
Just like the market, people can also be unpredictable. And when your projected cash flow depends on tenants behaving perfectly, you’re not taking into account the human part of it all.
There can be a risk of property damage, not paying on time or at all, failing to report maintenance issues, or any other headache-inducing scenarios.
If you’re putting your money into a rental property of any kind, there’s definitely a risk of vacancy. You need renters to actually make a profit, and too much time with a vacant property results in a loss of cash flow.
Making a little room for human error is essential before investing in real estate – and can keep you prepared for potential issues that arise.
How to mitigate risk with apartment syndication?
Okay, now here’s the good news…
With the right asset class and execution, we can help you get to that sweet spot of high reward and low risk. 🤩🤩
It really comes down to these seemingly simple areas: knowledge, asset class, and team.
With the right knowledge, you can prepare for just about anything. With the right asset class, you create a scenario where the reward outshines the risk. Aaaand with the right team, you can rely on their extensive knowledge to fill in the gaps and handle the day-to-day effort.
Now, let’s take the risks we discussed earlier and see how we can create a safer way to grow your wealth.
Maintaining positive cash flow
Here’s the wonderful thing about real estate…there will ALWAYS be a basic need for shelter. Investing in a basic need means that you offer something essential to the world. 🌏 So, as long as you choose the right deals and put trust in the right team, apartment syndication is a great way to decrease the risk of negative cash flow.
Dealing with market unpredictability
Apartment syndication is a really good choice for dealing with changing markets. For example, it’s the one investment type that really does benefit from high inflation. So, even when the world turns upside down, prices skyrocket, and everything changes, your apartment investment will still produce cash flow.
Of course, things like location, demand, and government policies for different states all play a part in choosing the right deals. But hiring the right team that you trust will help you rest easy about your investments.
How about those tenant issues?
When it comes to those potential problem tenants we discussed earlier, knowledge and research can be your new best buddies. By doing the proper due diligence, you know what to look for in a location, market, and surrounding demographics to have a high demand in housing. 🤓🤓
You can also learn how to price your rent the right way, maintain a pleasant living environment, and hire property management pros who can help keep tenant turnover to a minimum. You can put safety measures in place like background, credit, and work history checks.
Where there’s a will there’s a way, right?
If you’re willing to put in a little effort, there are LOTS of ways of decreasing your risk of vacancies and people problems.
Now, you decide if the reward is worth the risk
Sometimes risk is inevitable‼️ But, as we just discussed, the level of risk can be adjusted with apartment syndication.
We believe that by doing your due diligence and putting trust in the right team of people, apartment syndication can be one of the least risky investment strategies. 🙌
Curious to learn more? We can help fill you with investment knowledge and resources to guide your investment journey while offering life-changing opportunities to grow your 💰 wealth!
Click here to see what working with the Kitti Sisters has to offer you.
GET ME ON THE KITTI FREEDOM CLUB
………..
Rate, Review & Follow!
“I love Cashflow Multipliers.” ◀️ If that sounds like you, please consider >> rating and reviewing our show! This helps us support more people — just like you — move toward the financial futures that they desire. Click here to let us know what you loved most about the episode!
Also, if you haven’t done so already, follow the podcast. We’re sharing the best tips, tricks, and secrets in owning your own time so achieving financial freedom early and permanently becomes easier. Follow now!
Comments +