The single greatest risk of owning physical rental property is prolonged vacancy combined with illiquidity, which can severely disrupt cash flow while fixed expenses like property taxes, insurance, mortgage debt service, and maintenance continue to accumulate. Unlike liquid financial assets, real estate cannot be converted into cash quickly without incurring steep price concessions. Additional major risks include unpredictable tenant default or property damage, local economic downturns, unexpected capital expenditure requirements for structural repairs, and adverse regulatory or zoning changes.