6.16.2005

Q&A: which is the most risky form of real estate investment...

...REITs, rental property, purchase of a personal residence or raw land?

A: Raw land, which is a purely speculative investment: not diversified, produces no cash flow and no flow of services.

  • A personal residence will provide a flow of services even if it does not turn a financial profit.
  • Rental property will generally provide an income flow even if it is insufficient to earn a positive profit.

Bonus Points

  • REITs (real estate investment trusts) will likely be the least risky because the other risks have been diversified.
    • REIT is similar to a stock or bond mutual fund, but the money is invested in property and buildings.

Category: C++ Quant > Financial Markets

1 comment:

  1. This answer seems biased toward a passive investor. In fact the most hands on investors will see the exact opposite risk profile given the options you proposed.

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