The Truth About Risk in Real Estate Investing

Episode Overview:

In this episode of The Ironclad Underwriting Podcast, host Jason Williams sits down with Frank Patalano to unpack the many layers of risk in real estate investing. From financing challenges and market shifts to tenant turnover and operational missteps, they explore how each factor can influence an investor’s long-term success.

Jason and Frank discuss why financing risk often peaks at refinance rather than at purchase, especially in today’s high interest rate environment, and how smart contract structuring and proper underwriting can make or break a deal. They also talk about the realities of running properties through changing market cycles, the importance of strong management teams, and why having the right systems and people in place can minimize operational setbacks.

Topics Covered:

• Market risk and how economic trends affect investment performance

• Tenant and resident risk in varying market conditions

• Financing risk at purchase and refinance stages

• Operational risk from management and maintenance challenges

• Liquidity risk and the importance of cash reserves

• Location and economic risk tied to neighborhood and policy shifts

• Valuation risk and the dangers of overestimating property performance

• Legal and liability risk and how to protect assets

Key Quotes:

• “Financing risks often come at refinance time, not at purchase, because by then the market may have changed and your options are limited.” — Frank Patalano
• “Good underwriting is not about predicting the future. It is about preparing for what could go wrong and knowing how to pivot when it does.” — Jason Williams
• “Every deal has risk. The question is whether you understand it well enough to manage it.” — Frank Patalano

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🎧 Connect with Frank:

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