Investments come in all shapes and sizes. The investors who see the most profit, boast a diversified, and intelligently put-together portfolio. Here, we will explain exactly why you should diversify and what you can do to get started!
Why Should I Diversify my Investments?
When you diversify your portfolio, real estate or otherwise, you are aiming to lower your risk, while maximizing your return. Investors will agree that a diversified portfolio will yield the results you are after faster, and with the least amount of risk. You should have a plan in place and specific goals in mind. As the market changes, so should your strategy. It is important to be flexible so your investments can change as the market does.
Some examples of real estate investments:
Rental Properties – Owning a single or multi-family property is a great way to provide additional income. Do your homework on being a landlord or hire a property management company to help you navigate the process until you get into the swing of things. One tactic many people use is to purchase a property with up to 4 units, living in one and renting out the other 3. A property with 4 units or fewer will still qualify for a residential loan. The great thing about rental properties is that you can buy 1 or 10. You can start small, and grow it into an empire, or simply own a rental property that pays for itself. Many people do this with their future retirement homes.
Flip Properties – Flipping requires a lot of experience and knowledge. Many people dive in after watching too much HGTV and get in over their heads. If you choose to flip homes, it is wise to have a construction and real estate background. You will need to accurately price repairs, project times and market fluidity. Many people choose to work with a partner. One person is versed in real estate, the other versed in construction.
Specialized Sectors of the Property Market (Real Estate Niche) – This includes things like trailer parks, storage units, and land (often leased for recreation, parking, etc.) These niche investments may offer low competition and high returns.
Private Lending – This is your opportunity to become the bank and earn the high-interest rate that the bank is earning on your money when you own a CD or have funds in a Money Market account. It’s your opportunity to eliminate the middle man and increase your returns. Click here for more on private lending.
How Do I Start Investing?
Start planning asap. Set your goals. Know what are you trying to achieve with your portfolio. Follow your market trends and keep yourself abreast of major real estate transactions in your area. Another way is to connect with professionals who are well versed and can assist you in diversifying your investment.
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