FINC 475 Real Estate as an Investment (Due 9/16)

Investing in real estate has changed over the years. In the past one could acquire real estate and hold on to the property for many years and receive a solid return on their investment. Presently, investing in real estate is a lot like investing in the stock market. The more return you want the more risk you have to take on. There is no longer a constant growth in the real estate market, you are gambling every time you invest. Just like the stock market, you can hedge your risk by investing in multiple markets. If you put all your money in one real estate market you could win big, or you could lose big. By investing in a variety of real estate markets you don't put all your eggs in one basket. This is similar to investing in a mutual fund in the stock market, some stocks may go down but others will go up. By doing this, you minimize risk.

http://www.theinvestortoday.com/articles/what-are-the-risks-of-real-estate-investing/
This article lays out the different risks in real estate. It also correlates your personality as to how you deal with risk. One risk the article claims in real estate is negative cash flows. The business you invest in on the real estate can go south and not be profitable. This leaves you with a negative investment. Another risk when speculating on real estate is that there will be no appreciation. If an investor plans on flipping a property, and the appreciation on the property is not higher than inflation, the investor will lose money. The article claims you should only buy real estate that you know you can sell for a profit. This statement is a bit ridiculous, there are few times you know you can sell something for a profit before you buy it. There must be some sort of speculation or everyone would do it.

http://www.creonline.com/blog/9-ways-to-eliminate-real-estate-investment-risks/
This article gives you insight on how to eliminate risk when investing in real estate. In my opinion, the article makes investing look easier than it is. It says vague things like "buy the right house". It is often difficult to know what is the "right" house. The part of the article I agree with is the section talking about using the right financing. I find this to be very important in real estate because if you choose the right financing you have a higher chance of making a profit on the investment.

http://articles.economictimes.indiatimes.com/2011-04-08/news/29396722_1_real-estate-bse-realty-index-stock-market
This article explains the similarities in the real estate market and the stock market. It claims that the trends are very similar, and they both are very related to the economy as a whole. It also explains that stocks are much more liquid than real estate, which I agree with. Some real estate investments can take years to get out of, but stocks always have a market to be sold in.