Real Estate Investing • 1 min read

How to Diversify Your Real Estate Portfolio

Fierce & Associates

A real estate portfolio is a collection of your real estate investment assets. To build a successful portfolio, you must carefully invest and manage your assets. If you’re growing your investments and want to lower risk, it’s essential to diversify your portfolio. Keep reading to learn more about mitigating risk and ensuring steady returns through diversification. 

Choose Various Asset Types

When investing in real estate, you can choose from various asset types. Your options include single-family homes, multi-family properties, apartment complexes, retail spaces, industrial facilities, and more. When you invest in varying types of assets, you protect yourself against significant economic changes. A downfall in one asset will not put you at a significant disadvantage if you have stable investments in other asset types.

Invest in Different Areas

Real estate markets vary by geographical location. By diversifying across different markets, you can take advantage of the fluctuations and reduce risk when one market has a slowdown. Geographical diversification reduces overall risk and improves return. If all your real estate holdings are in one market, you face the danger of losing the majority of your profits in the case of a housing market crash. 

Active & Passive Investing

Active real estate investing involves fix and flips, wholesaling, and renovation projects. Passive real estate investing involves real estate funds, owning rental properties, and real estate investment trusts (REITs). A mix of both is a great way to diversify your portfolio!

Talk to an Expert in the Industry 

Consult with an experienced real estate agent, familiar with different types of investments. Your realtor may have access to off-market properties, knowledge of micro-markets, and have firsthand knowledge and investing experience. An agent who has invested in real estate themselves will be able to provide insight on the various obstacles to avoid when it comes to your investments. Contact your realtor today and ask them how you can properly diversify your portfolio!