Here are 3 ways to diversify your portfolio
It’s a new year and time to evaluate your finances and diversify your portfolio by investing in real estate. One of the biggest reasons investors diversify their real estate portfolio is to mitigate risk exposure. The phrase “don’t put all your eggs in one basket” applies directly to this concept. Consider instead spreading your investment across a broad spectrum to balance potential risk.
The following breaks down three simple ways for investors to diversify:
Invest in Multifamily Properties
When diversifying your portfolio, nothing may be more compelling than multifamily properties. Not only will they produce a larger sum of cash flow compared to single-family rental properties, but they essentially carry less risk. Investing in multifamily properties offers investors a unique opportunity to generate additional income from a single investment. This option can provide financial freedom, as well as passive income for retirement.
Invest in Commercial Properties
This investment type, which essentially consists of purchasing properties and leasing the units to businesses for income, offers investors a combination of steady cash flow, lower vacancy risks, higher income potential, and more attractive leasing contracts. Think about it: commercial real estate leases are generally longer than residential rentals which means these investors have a unique advantage to earn relatively consistent and reliable income on a monthly basis.
Invest in REITs
A real estate investment trust (REIT) is a company that owns or finances income-producing real estate. These work similar to stock investments by offering common shares to the public but are contingent on the state of the real estate market rather than on an exchange. In essence, REITs are part of a private and public equity stock in real estate companies that invest in properties, mortgages, and other real estate-related investments — and they offer all types of regular income streams, diversification, and long-term capital appreciation.
Always consult your tax and/or financial advisor before you diversify your portfolio. If you are considering diversifying your portfolio and looking to invest in real estate in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities, please call me at 805.886.9378 or email me at Cristal@montecito-estate.com. Also, take a look at my comprehensive website where you’ll find many possible investment properties including this Private Santa Barbara Investment Property. If you want to sell one of your investments in the area, I’ll happily add your property to my exclusive portfolio.