Updated almost 10 years ago on .
STEVE BOND ON WHAT IS RISK
Hello:
A little crash course on risk. essentially a risk free longer term say 30 year govt bond is about 3 percent, if they make even a 30 year cd it would be the same. This is the riskless yield. The govt and or the bank will pay you. As you get paid more yield lets say a 10 percent cap rate now lets visualize the risk.
- TENANTS --- A DOWN MARKET --- EXPENSIVE REPAIRS --- A HURRICANE ETC --- A NEIGHBORHOOD THAT TURNS WRONG.
THATS A FEW OF THEM of course there are more. thats why you are getting 10 percent on that cap rate. It is not a freebee. Anyway you can mitigate some risk with care and dilligence. There is money to be made or as I put it cows to be milked.
Your BFF
Bond Steve Bond