What are the potential risks of real estate investing?

Real estate investing comes with several inherent risks that can impact overall returns, and the correct answer highlights some of the most significant ones. Market fluctuations refer to the changes in real estate values due to economic conditions, interest rates, and demand. These fluctuations can lead to declines in property values, affecting investment performance.

Property damage is another crucial risk. It can result from various factors, including natural disasters, accidents, or neglect. Damage can lead to unexpected expenses in repairs or a loss of income if the property becomes uninhabitable.

Tenant issues can also pose significant risks. This includes difficulties in finding or retaining tenants, potential issues with tenant behavior, or non-payment of rent. These challenges can lead to income loss and additional costs associated with finding new tenants or legal proceedings.

The other options do not accurately reflect the reality of real estate investing. For instance, the idea of guaranteed returns regardless of market conditions is misleading, as investments can be significantly affected by various market factors. Similarly, stating that there are only property damage risks oversimplifies the complex nature of real estate investing. Lastly, limited liquidity is a recognized issue in real estate, but it doesn't imply the absence of risks.