Investing in apartments offers many benefits, it is important for passive investors to be aware of the potential risks associated with this type of investment.
One of the biggest risks of investing in apartments is market fluctuations. Real estate prices and rental rates can be affected by changes in the economy, interest rates, and other factors. If there is a downturn in the market, landlords may have difficulty finding tenants or may have to lower rental rates, which can impact the overall returns on investment.
The potential risk when investing in apartments is tenant turnover. While rental income can provide a reliable source of passive income, landlords must also be prepared for the possibility of turnover. If a tenant moves out, landlords may have to spend money on repairs or maintenance to prepare the property for a new tenant.
In addition, if there is a prolonged period of vacancy, landlords may have to cover the cost of the mortgage and other expenses out of their pocket, which can impact their overall financial situation.
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