Baby steps in assessing real estate risks as financial risks

Case Notes 07: Real estate is often seen as an alternative investment for many retail investors. But if you want to invest in real estate, you then have to view its risk as another financial risk. This post provides one way to undertake such an analysis. Like any investment, there are risks when investing in real estate. While there are several ways to look at real estate risks, this article looks at risks from a financial investment perspective. “Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment.” Investopedia Thus, real estate investment risk is the likelihood that what you make from both capital gain and rent is less than your original investment. We can then adopt the risk management framework to identify and mitigate negative returns when investing in real estate. I hope that the article can provide a frame