Investment in Real estate in highly risky. As well, the risk varies from time to time depending on the economic conditions. There are several risk, factors which must be considered before investing in Real Estate as an investment strategy. The risk factors in real Estate are genral economic conditions, interest rate, tax implications and changes, cost factors, regulatory impediments and costs, changes in enviornmental regulation and local government zoning regulations and changes and stamp duty and other land charges by the government. If these factors are not considred carefully and compared with other investment strategies then it can cause considerable losses to an investor and will not produce adequate return on investment compared to the risk of investment in Real Estate. However, in appropriate conditions it may produce substancial returns and risk may be lower than other investment strategies. A person who is not expereinced in real estate investment must get professional advise before investing in real estate from licenced financial planners or from a reputable fianacial institution. As well, get advise from real estate Institutions and bodies in a country and from Real estate agents.
In favourable conditions real estate investment can earn a high rate of return to that of other alternative investment strategies. There fore, real estate investment must be considered as one of the investment strategy in a portfolio so that the diversification may play a role in reducing the risk and earn more than adequate return. Some times it may earn more than avarage returns of similar portfolios of investment.
In effect, for any investor real estate invetment is an option. However, it depends on the risk profile of the investor and the risk factors compared to other alternative investment strategies. If real estate invetment is considered as a portfolio then there is more possibility it may produce more than adequte return on investment for the risk. One also must note real estate investment has high risk comapred to other investment strategies.