Having a comprehensive real estate portfolio is a great way to earn extra cash. But building a good portfolio requires a certain amount of business acumen. Portfolio building and portfolio management are two skills you definitely want to have.
The Scottish-American industrialist Andrew Carnegie once said that 90% of millionaires got their wealth by investing in real estate. If you want to learn how to make better real estate investments and secure your financial future then this guide can help you. Read on to learn some of the golden rules of real estate investment and how you can begin building a robust portfolio today.
Diversity Is Key
When it comes to a real estate portfolio (or any type of investment portfolio for that matter) the more diverse it is the better. What this means in practice is that you should try and invest in a range of different types of opportunities.
You can look into being part of a REIT and invest in commercial buildings as well as residential units. A diverse portfolio minimizes your risk of losing your investment because if one type of property investment fails you've still got plenty of other types to fall back on.
Weighing Up Risks
The very nature of investment means that there's always going to be some sort of risk involved. As we've already stated you can do things (like having a diverse portfolio) to minimize your risks as much as possible. But they'll never be zero.
One of the interesting and challenging things about real estate investing is that often it's the investments that present the biggest risk that can have the best payoff in the end. It's crucial to be able to take risks in business, but these risks should be calculated. The best investors have the knack of seeing which risks are going to pay off and which ones are best avoided.
Working With the Experts
While it is of course possible to manage your investments completely on your own it isn't always advisable. Working with professional portfolio managers will give you access to many valuable tools.
A property management company, for example, will have insights into the markets you're looking to invest in. Portfolio managers also have the advantage of having years of experience in their field which means they're better able to spot savvy investments. Portfolio managers are also able to offer valuable financial advice from a unique perspective.
Portfolio Management Best Practices
If you're looking to dip your toe into the real estate investing waters make sure to always follow best practices. Keep your portfolio diverse, take calculated risks, and don't be afraid to seek out savvy financial advice.
If you're in need of help with portfolio management or anything else in the realm of real estate then we'd be happy to help. Get in touch with a member of our team today to hear about what we can do for you.