Why Invest In Multiple Properties Rather Than One?
Last updated 23/07/2018
Many investors aspire to own more than one property, although is this a pipe dream rather than a practicality?
Below we explore the benefits of why you should invest in multiple properties rather than just one.
You’ve dipped your toe in and have invested in your first property, but it is still a long way off before you can quit your day job.
Investing in just one property won’t make you a full time property developer just yet.
You will not be financially free from just one property, you will need to keep up with mortgage repayments, and a lot of income will be tied up within the property.
Investing in more than one property will mean you can use the incomes to pay down the mortgage, and live off the spare cash flow, as well as the multiple incomes the rent from each property brings in.
Over time, the property will appreciate in value and when it comes to sell because you have paid down the mortgage you can the reap the equity.
When investing in just one property there may come a time where the area the property is in comes to the end of its life cycle.
You may find it hard to rent it out or sell. Having multiple properties within different areas means that other properties may be in up and coming areas which means you will be getting growth out of at least one property at any one time.
You are diversifying your portfolio and growing wealth from the different properties.
Spreading The Risk
If your property sits empty for a prolonged period of time, can you afford to finance this? Having investments in multiple properties means that you spread the risk if the worse case scenario hits.
You won’t feel the financial impact of the empty property as much as if you had other properties to fall back on and thus spreading the risk.
Paying down debt
Investing in multiple properties and then selling them to pay down the debt means that come to retirement you will have a small and concentrated portfolio of properties you own with no debt.
If you only have one property you cannot sell it to access the equity, than if you had multiple ones.
If you have invested in multiple properties and one outperforms the others than you can use the income as a financial buffer for the others.
If you only have the one poor performing property than you cannot use it as a buffer in case things do go wrong to help with the costs.
When it comes to investing in one, two, or even five properties we believe in doing your homework and making yourself aware of all of the risks beforehand.
Have a look at the JaeVee blog for more invaluable information about investing in property.
If you're interested in the diverse range of property opportunities available on our joint venture equity platform, please take a look at our properties page.
We would advise you to seek independent financial advice before investing. Capital at risk when investing in property.