Skylar is looking to purchase real estate as an investment using all of her available funds, but she has several concerns. Which of the following concerns are valid from an investment standpoint?(1 point)

Question

Responses

She might be disappointed because real estate usually offers modest returns.
She might be disappointed because real estate usually offers modest returns.

She might miss a better investment opportunity because real estate is not particularly liquid.
She might miss a better investment opportunity because real estate is not particularly liquid.

She might lose her investment funds because real estate is notoriously risky.
She might lose her investment funds because real estate is notoriously risky.

She might regret the purchase because she would not want to live on the property herself.

Answer 1

From an investment standpoint, the following concerns are valid:

1. She might miss a better investment opportunity because real estate is not particularly liquid. - This is a valid concern, as real estate transactions can take time to execute and may tie up a significant amount of capital, preventing her from quickly reallocating funds to other potential investments.

2. She might lose her investment funds because real estate is notoriously risky. - This is also a valid concern. Real estate investments can indeed be risky due to market fluctuations, property values declining, or other unforeseen issues like natural disasters or economic changes.

The other two concerns about modest returns and regretting the purchase because she wouldn't want to live on the property herself are less directly related to investment considerations. While it's true that real estate sometimes offers modest returns compared to other investment options, this can vary widely depending on market conditions and location. The regret about personal use is more subjective and doesn’t directly address the investment's financial performance.