“Risk comes from not knowing what you're doing” – Warren Buffett
Being able to get out of an investment is oftentimes just as important, if not more important, you’re your ability to get into one in the first place. One of the many factors that determines your ability to withdraw from an investment, and therefore its level of risk, is its length. Generally speaking, the longer you're required to keep your money tied up in an investment, the more volatile and risky the investment is, especially if you do not have direct control and cannot get out because someone else is managing the investment.
Are Real Estate Investments Risky?
The real estate market is typically stable, with gains and losses taking a longer period of time to mature. Therefore, we like to use short terms of 6 to 12 months in this type of a market. This does not mean that we won't get right back out there and invest again; it just means that getting in and getting out is a best practice for mitigating risk in any real estate investment. With that being said, most commercial real estate investments are 5-year commitments at a minimum. Therefore other risk mitigation strategies must be used.
Stay tuned for to our blog for more information on this topic in a later post!
Invest in Real Estate Today with The Legacy Group
For more information about short-term real estate investments or to find out how you can invest in a small balance real estate fund, contact our real estate equity firm at The Legacy Group today. Our team can answer all of your investment-related questions and help you find an investment strategy that suits your individual financial goals.
Call (719) 578-8387 today to get started.