dq 2 - Risk Risk is the chance that things will not turn...

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Leverage is used to own an asset with very little or no money invested. Intent being to make profits on the increased value of the asset over time. Limitations are having enough financial resources to maintain ownership until the asset has increased to a satisfactory value. The largest cost of ownership will most likely be the payment of debt. Liquidity Liquidity is the ability to turn the investment back into cash in a relatively short period of time. Real Estate has a low level of liquidity. It may take months or longer to cash out and sell the property, where as stocks can be sold in a few days or even less time. Stocks have a high level of liquidity.
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Unformatted text preview: Risk Risk is the chance that things will not turn out as planned. Real estate has a large factor of calculated risk. It is a slow moving market and generally speaking, the longer time in the market, the less risk. Using a high level of leverage will also increase your financial risk. Business risk is also a concern if your property requires any management aspects. Investment Life Cycle The investment life cycle has three steps. The purchase, operation, and sale cycles. The key to a successful investment is to consider all of the income expected through each cycle and its timing to determine whether it is worth the cost....
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This note was uploaded on 05/07/2010 for the course ACCOUNTING ACC225 taught by Professor Professor during the Spring '10 term at University of Phoenix.

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