As investors and advisors to investors, many conversations typically include the proverbial warning about putting all your eggs in one basket. Words of caution related to the dangers of an undiversified portfolio are more than familiar to us. What we may not be so familiar with, however, is the level of recommended diversification and, more pertinent to our topic, the number of real estate investments a portfolio should contain.
In other words, is one real estate investment enough in this asset class to add the right amount of diversification and achieve the potential benefits?
The answer: it all depends on your answers to the following questions:
- Why am I investing?
- What are my expected returns?
- What do I plan to do with the interest (monthly income stream or re-invested)?
- How long do I expect to be invested?
- Do I plan to have a property management company involved by going with more than one property?
So, if you’ve answered that you’re investing because you desire a long-term investment with a monthly income stream coming directly to your pocket with plans to make your living off that stream of cash, then a multi-property investment may be the perfect option for you, given you have the upfront investment. If, on the other hand, real estate makes you nervous, you want to earn a steady 4 percent interest over just the next five years in order to put toward a child’s college tuition, a multi-property investment is not likely the most reasonable option for your particular needs and desires.
Wondering what’s best for you and your investment? The professionals at Class A Management understand not only overall portfolio diversification, but also the intrinsic ups and downs of every real estate transaction. Let us help you get the most from your investment decisions by making the right ones from the very beginning. Call us at 817-295-5959 or send us an email to firstname.lastname@example.org.