Real estate investing brings associated risks. Before assessing what the risk of drawing out equity from your primary home to invest it in a rental property is, review your current personal and financial situation. You need to know your own risk profile. Are you a conservative investor or a speculator type? Knowing what risk means to you is always important when investing in anything.
Once you know who you are as an investor, move to understand the numbers. How much equity do you have in your home? Are you the only person paying the mortgage? How are you paying the mortgage now? What happens in case you lose your job? What happens if the market tanks or the rental property sits empty for a few months? –The list of questions continues as there are also real estate investing questions to consider that are specific to the market, the property, and even the potential tenants. Just ensure that you answer these questions.
In high demand and high-priced markets your chances of success when investing equity from your home into an investment property present more opportunity. The converse is true in low- or lower-priced and demand markets. Couple that with your income from your job and how much equity you have in your home to assess how risky the venture is for you.
