How To Diversify Your Property Investment Portfolio
Last updated 23/07/2018
When it comes to having a successful investment portfolio the old age phrase of ‘don’t put all your eggs into one basket’ springs to mind.
Diversifying your property investment portfolio helps you spread your assets to reduce the risk.
There are two main ways you can do this, read on for how to diversify your property investment portfolio.
Different Types of Property Assets
The easiest way to diversify your property investment is to make sure that you do not have a lot of the same type of asset.
Many will invest in residential properties such as houses and flats but there are a number of assets types you may not have thought about which will diversify your portfolio such as:
Holiday homes such as villas -which can be let out all year round and you gain exposure to a different country’s market.
Houses with multiple occupancy (HMO’S) –a large house made into multiple rooms which mean multiple rental yields from the occupants.
Commercial property – less competition than residential and cheaper which means better returns on investment and often overlooked.
Real Estate Investment Trusts- offer common shares to public on property/ mortgages and real estate investment diversification.
Social and affordable housing- adds social value to an investment and profitable.
Serviced accommodation - full furnished ‘home away from homes’ usually managed similar to a hotel.
- Off plan properties - new build developments not ready for tenants to move in, you buy and wait for them to be ready.
All the above types of asset come with their own risk and benefits but having a varied and diverse portfolio will help protect you against the inevitable peaks and troughs of the investment market and if one asset performs badly the others will help minimise your loses.
Invest in Different Geographical Areas
When you start out investing in property it is likely you will do so close to home in the area you live in.
Whilst this is advisable for first timers as you become more experienced, investing in property in different areas will help diversify your portfolio and bring a number of benefits too.
Investing in capital cities, and up and coming areas away from home will mean property and rent prices are likely to higher.
This means that the rental yields they are likely to bring in will maximise your returns.
Properties in different cities and regions will all come with their own price bracket so do your research and see where you can invest in to gain exposure to a different type of market.
This is a great way to diversify your property investment portfolio.
Throughout any investment there will be upturns and downturns so diversifying your portfolio is a great way to protect you against any big financial implications.
JaeVee are with you every step of the way with your investment and can provide impromptu advice on the best strategy for a successful diversified portfolio.
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We would advise you to seek independent financial advice before investing. Capital at risk when investing in property.