Diversifying your Portfolio of Real Estate

diversify portfolio

You can diversify your portfolio of real estate in a number of different ways, and each mitigate a different risk. We recommend you consider selecting a diversified strategy that works for your situation.

Own more than one type of property

This is a goal of many property investors, but it must be explored as part of your overall strategy. If you own 4 houses in 4 neighbourhoods, chances are if you have a fire in one, it won't affect the other three. If you happened to own a 4 plex, a fire might very well damage your entire investment.

The other consideration is whether you will have a mix of retail, industrial, and / or residential real estate. Success in retail and office has much to do with location, visibility and appearance of the space. Success in industrial spaces is based on building size, height, suitable mechanical, and flexible bay size.

Own Property in more than one city

Most investors are drawn to new markets outside their hometown because of higher returns (ROI) or because they seem to spend vacation time there where they have time to shop the market. Although this may allow the investor to spend the time needed to research the area, we caution investors to make sure they don't get caught in the trap of making a decision based primarily on emotion (ie. you love Vegas, so you need to buy a place there).

All of the investor clients I work for like to be close to their investments, so they can drive by an admire them.   And whether they self-manage them or not, they like the ability to focus on their investment when time allows.

Invest in property in more than one Country

With all that we've seen happen in the international markets lately, some investors have decided to spread their holdings out between two or more markets. Before you do this, I suggest that you do all you can to mitigate the risks. I recommend that you ensure that you are well covered from an insurance perspective, research the different tax and tenant laws, and contemplate the consequences of any changes like the currency changes, local or global recessions, natural disasters, etc.

We must consider these purchases carefully, because if you change your mind and decide to sell it, you may not be able to.

Bob Sheddy

Bob Sheddy

Broker of Record
CENTURY 21 PowerRealty.ca
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