How to distinguish the systematic risk and individual risk of real estate investment?

Systematic risks are beyond your control, such as national tax policies and regulations, various purchase restrictions, and economic conditions in the macro environment;

Individual risk is the risk that investors can control by themselves, such as investment regional risk and investment mode risk.

Note: 1. System risks include:

(1). Inflation risk: Also known as purchasing power risk, it refers to the risk that the purchasing power of recovered funds after investment is lower than the initial investment.

(2) Cyclical risk: the risk brought to investors by cyclical fluctuations in the real estate market. The cyclical fluctuation of the real estate market can be divided into four stages: recovery and development, prosperity, crisis and recession, and depression. When the real estate market enters the crisis and recession stage from the boom stage, and then enters the depression stage, the sharp drop in real estate prices and the shrinking market turnover will often make some investors with weak anti-risk ability go bankrupt due to financial debt problems.

(3) Market supply and demand risk: the risk brought to investors by the change of supply and demand in the real estate market in the investor's region.

(4) Interest rate risk: the impact of interest rate increase on real estate investment: first, it leads to the depreciation of real estate value; Second, it will increase the debt burden of investors, and third, it will increase the financing cost, thus curbing demand.

(5) Liquidation risk: the risk of capital loss caused by discount when you are eager to convert goods into cash. ...

(6) Policy risk: The government's policies on land supply, land price, taxes and fees, housing, price, finance and environmental protection in the process of real estate investment bring risks to investors. The most effective way to avoid this risk is to choose projects encouraged by the government and projects with guaranteed income or preferential tax policies for investment.

(7) Contingent loss risk: loss of family investment caused by fire, wind, flood, earthquake, nuclear radiation, theft or other unexpected disasters. Preventive measures are to insure property insurance and strengthen property management.

(8) Political risks: risks mainly caused by coup, war, economic sanctions, foreign aggression, strikes, riots and other factors. The immovability of real estate makes it possible for real estate investors to bear considerable political risks. Political risk is the most harmful risk in real estate investment.

Secondly, personal risks include:

(1). Income cash flow risk: the risk that the actual income cash flow of real estate investment projects does not meet the expected target requirements.

(2) Capital value risk: the difference risk between expected capital value and actual capital value. The value of capital depends largely on expected income, cash flow and future operating expenses. At the same time, the capital value will also change with the change of the rate of return.

(3) Future operating expenses risk: the risk caused by the fact that the actual operating expenses of the property exceed the expected operating expenses.

(4) Holding period risk: the risk related to the holding time of real estate investment. The longer the holding period, the greater the possibility and risk of encountering uncertain factors that affect the income.

(5) Comparative risk: also known as opportunity cost risk, refers to the risk that investors lose other investment opportunities and corresponding possible benefits after investing in real estate.

(6) Time risk: the risk related to time and opportunity in real estate investment.