Dec 4, 2019
Dylan Marma and Mike Taravella discuss the risks when investing
in a multifamily syndication:
- Interest Rate Risk - This is the risk that as
an investor you become less able or unable to cover your debt
- Liquidity Risk: Risk that the investment is
not able to be sold at the planned time. This is amplified in the
event of a high point in the market, or being in a distressed
position in need of a "fire sale".
- Funding Risk: The risk that the general
partner falls short on their raise. This is common in the event of
a fund when investors are required to invest via a capital
- Concentration Risk: The risk of loss due to
having all of your eggs in one basket or being overly concentrated
in one asset/asset class.
- Credit Risk: This applies largely to debt
investments or to real estate investors dependent on tenants. You
run the risk of having a poor quality tenant and/or having their
credit drop during the holding period.
- Inflation Risk: The risk of loss in purchasing
power because the value of your investments does not keep up with
- Horizon Risk: The risk that your
investment horizon is shortened due to an unforeseen circumstance,
such as a fallout of the partnership.
- Political Risk: This is the risk that
some level of political event/ordinance poses a threat on the
operations or profitability of the business.
- Currency Risk: Currency risk is the
potential risk of loss from fluctuating foreign exchange rates
- Operational Risk: The risk of loss as a result
of inadequate processes and systems to support the
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