“Diversify, diversify, diversify” is a popular mantra of investment professionals. A diversified portfolio can indeed help spread — and therefore minimize — the risk you undertake when investing. That definitely holds true for real estate investing.
Real estate can be one of the safest investments you can make. It can yield high returns over the long run, through economic boom times and downturns. However, these investments have to be made wisely — and that means having a real estate portfolio with diversified assets.
What Kind of Diversity?
Investing in multiple types or asset classes of real estate properties is important. This can include residential real estate (single family home developments and multi-family properties like apartment buildings and condominium complexes).
Commercial real estate is also a popular investment. Commercial properties can include office buildings, hotels, seniors housing and medical buildings as well as industrial, retail and mixed-use properties. Mixed-use real estate typically combines residential and commercial space. A diverse commercial real estate portfolio can include several of these types of property.
Why Geographic Diversity Is Wise
Real estate markets can vary drastically – not just from state to state, but among cities and counties within each state, and even within a city. Once-dying neighborhoods can become thriving ones within a few years — and vice-versa — sometimes simply through good press and word of mouth. That’s why it’s wise not to invest exclusively in one geographic area. A once-booming city can become a ghost town if a major employer leaves or goes out of business.
Politicians at all levels can make changes to laws and local ordinances that make things difficult (and expensive) for property owners and investors. Changes in property taxes, rent control laws and more can have a significant impact.
Whatever types of real estate you invest in, it’s essential to look at long-term trends. For example, our country is aging, and people are living longer. More assisted living, memory care and long-term care facilities are being built. However, even seniors who are still healthy and active enjoy being around people their own age. Senior communities of all kinds – including cohousing communities – are becoming popular.
Partner with Real Estate Investment Pros
Many people want to add some real estate investments to their portfolio, but don’t have the time, expertise or inclination to do the research necessary to find a diverse range of investments or the resources to manage them. That’s where private real estate investment firms come in. They pool investors’ resources so they have access to a diverse range of properties selected by real estate investment professionals whose job it is to study the market, the economy and overall trends, and then invest in properties that have a good chance of producing long-term gains. They also handle the ongoing management of many of those properties to help ensure their productivity.
Call Realty Capital Partners (RCP) at (469) 533-4000 or email us at RCP@rcpinvestments.com. One of our knowledgeable real estate investment professionals will answer your questions and help you get started.