Diversifying your investment portfolio is important for several reasons, including the potential to increase income and prevent any one source of loss from ruining you as an investor.
Investing in more than one property, equalizes the investors risk. For example, if an investor has twelve properties instead of one, a vacancy will only cost them 8.3% of their income. Try to invest in properties located in different cities, as the markets can vary greatly. If the market in one city is currently dragging the other may be flourishing.
Consider investing in both luxury and low budget properties. Luxury housing tends to attract more reliable long-term tenants, but these properties are not always in high demand, whereas, budget properties will always be in high demand, although investor could face higher credit risks. Also, think about investing in commercial properties, not just residential. Commercial properties might not be as simple as residential, but they can have great benefits as well.
Landlords looking to increase their income tend to believe that raising the monthly rent at renewal is the easiest way, although that is not always the case. Increasing the monthly rent at each renewal period can cause higher tenant turn overs, which causes vacancy loss and maintenance expenses. Instead, diversify the monthly income by finding new sources of revenue, such as adding coin laundry to a multiunit property, or invest in additional parking or storage for a monthly fee. Always be prepared to adjust to changes to maximize your income.
Are you interested in diversifying your portfolio or do you need help managing your existing investments? Contact us at Ryntal Property Management for all your investment needs!