When it comes to buying real estate, Patience, prudence, insight, educated decision making and a little luck can present you with promising home buying opportunities.
However, financial professionals, will often tell you that "Risk" evaluation is the most important criteria one must consider before making the decision to buy.
Risk/Reward can be defined as the amount of risk one must take to provide a similar amount of return on investment. Generally, the higher the risk, the higher reward.
Here are 3 thoughts to consider when evaluating risk before deciding whether or not your next real estate buying opportunity really is as good as it looks.
1) Comfort level - too much stress, fear , and unhappiness, are lingering effects of taking a risk larger than you may want to handle
2) Can you afford a loss - if there is one thing this difficult period in real estate has taught us, is that real estate is not guaranteed to go up forever, ask yourself if you can afford to hold your real estate years and years past what you had hoped.
3) Opportunity cost - deciding not to buy that "good deal" may be the best investment you ever make. Experts will tell you that there are always other buying opportunities. If you have the money in your pocket and the ability to make a decision when it presents itself you may find that opportunity that you could not have take advantage of if you had purchased that deal on which you passed.
Yes, There are a lot of great deals in Scottsdale, Fountain Hills, Mesa, Peoria, Glendale, and Paradise Valley.
and yes, We All take Risks in Life; personally and professionally. The purchase and finance of a home is a risk that most people take. Historically, it has been very rewarding. However, be prudent, make sure you have done your research, have double checked your finances, and have properly evaluated risk;
That real estate deal that sure looks good, may not be as good as it looks.
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Copyright © 2008 By James Wexler, All Rights Reserved. *This Real Estate Deal Sure Looks Good .... I think*
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.
Very good post Jim. I think many investors who have recently foreclosed on their properties made the mistake of not calculating their risk properly when making the decision to buy. Opportunities are always out there and some of them definitely have to be passed up when considering the various factors you discussed above.