 TITLE: How to Start Investing in Real Estate CONTENT: What Are the Risks of Real Estate?\n----------------------------------\nLike any investment, real estate investing comes with risk. Because most forms of real estate investing are not directly tied to the stock market, the risks are typically different. Here are some to know about.\n*   **Unpredictability**: Like the stock market, the real estate market is unpredictable. While properties may appreciate well over a handful of years, there's no guarantee that growth will continue. If the real estate market crashes after you buy property, you could be stuck with a house that's way overvalued.\n*   **Poor locations**: Location is crucial in real estate investing. If you're buying residential property to lease, you want to buy in an area where people want to live, preferably for the long term. And if you're investing in commercial real estate, you want to avoid areas where there's historically been a lot of business turnover.\n*   **Bad renters**: There are a lot of things you can do to try to weed out bad renters, such as checking credit scores and calling previous landlords. But that's not a guarantee that you won't get stuck with a renter who pays late or damages your property.\n*   **Vacancies**: The idea of getting consistent rent payments every month is nice, but it's unlikely to happen. As long as you buy in a good location where the demand is high, you may not need to worry as much about regular vacancies. But even in good areas, a bad market could make it challenging to find renters consistently.\n*   **Negative cash flow**: Buying real estate comes with a lot of ongoing costs, including mortgage payments, property taxes, insurance, repairs and maintenance. If you end up receiving less in rent payments than you're shelling out for these costs every month, you could lose thousands of dollars every year. Make sure you account for every cost to try to avoid or reduce any losses.\n*   **Lack of liquidity**: While real estate may generally have less volatility than the stock market, there is one big disadvantage. That disadvantage is the lack of liquidity. If you need money now, you'll need to either sell the property or take out a home equity loan or line of credit—both of those approaches can take several weeks. With the stock market, you simply sell your shares, and you can have the money in your bank account within a few days, assuming you've made a gain on your investment. END