Rental Property Investment

We know several people who have rental property as part of their investment portfolio and at least as many who would like to own rental property. An article in the New York Times outlines some of the potential risks in rental property investing that many people overlook. For example, vacancy or natural disasters are possibilities. There are other potential risks such as a fire at the property and maintenance risks like pipes bursting or a leaking roof. By now, you should be well versed in risk and realize that these are idiosyncratic, or firm-specific, risks. Another potential risk with rental property that is often overlooked is that typically a large investment is required, which can result in the rental property being a large portion of a portfolio. This means you are left with a portfolio that is not diversified. While we are not saying that rental property cannot be a good investment, hopefully you have enough knowledge to consider how the risk of such an investment fits in your overall portfolio.