You can earn additional income from real estate and grow your money by investing in it. Investing in real estate isn't all gain, however; diversifying your strategy can reduce the risks. Investing in real estate is risky, just like any other investment.

If you're thinking about buying an investment property, here are some risks to watch out for:

·        THERE IS NO PREDICTABLE MARKET IN REAL ESTATE

Investors believed the real estate market could only move up shortly before the 2008 Great Recession. Buying a property today would get you a lot more money when you sell it in the future. Despite rising property values over time, the real estate market is unpredictable. Investments may depreciate over time.

·        AN UNSUITABLE LOCATION

It's always wise to consider the location first when buying an investment property. If you want to make a profit, your location is the most important determinant. Tenant pool, rental rates, and appreciation potential when we look at rental properties, as well as the demand for rental properties. It is generally acceptable to determine the best location by determining its return on investment. But you must do some research before selecting the best location.

·        INSUFFICIENT CASH FLOW

Expenses, taxes, and mortgage payments are subtracted from cash flow on an investment property. Money coming in less than what is going out can result in negative cash flow. Cash flow is negatively affected by a number of factors, including High vacancy, too much maintenance, High financing costs, Not charging enough rent, Not using the best rental strategy.

·        THERE IS A HIGH VACANCY RATE

Rent must be generated from your residential or commercial properties. Real estate investing involves a high risk of vacancy rates. Rent income from rental properties is particularly risky if the income is used to pay the mortgage, tax, insurance, maintenance, and other costs of the property.

·        AN UNSATISFACTORY TENANT

Your investment properties should be occupied with tenants to avoid vacancy risk. There is however a risk associated with that: an unsatisfactory tenant. The cost of having a bad tenant is often much higher than if you never have one.

It's generally believed that real estate is a solid investment, and savvy investors can earn passive income, obtain excellent returns, take advantage of tax advantages, diversify, and build wealth. Nevertheless, real estate investing can be risky just like any other kind of investment. By carrying out a complete real estate market analysis and rental property analysis, you can limit your risks.

Yes, investing in Real Estate can be really risky because of the negative cash flow incomes, faulty & bad locations, and high vacancy rates.