Ways to diversify a real estate investment portfolio

Building an investment portfolio that includes real estate assets is a great way to build wealth. Here are four options to consider and the benefits of including long term rentals as part of your strategy.

Real estate investment options

Here are four examples of real estate investment avenues that range in risk, commitment, and cost.

1. Short Term Rentals

These are vacation homes or condos that you put on the market for short term stays. As investments, these properties have huge profit potential, especially in high tourist areas and during busy travel seasons such as Christmas. However, that income isn’t consistent and more management is needed with the quick guest turnaround times.

 

2. House Flipping

Giving a home a complete renovation seems like the glamorous way to make money. You’re able to redesign a home that was outdated and sold for a good price, to be highly profitable and desired among homebuyers.  However, they can be time-consuming projects and often more expensive than expected if not pre-planned correctly. Find out how we can help with your renovation.

 

3. Real Estate Investment Trusts (REIT)

Basically, these are shares in real estate investment companies and are relatively hands-off in terms of managing. The benefit of investing in trusts is that you don’t need tons of capital to get started, however, there is limited upside or potential for leverage when compared to other real estate assets.

 

4. Long Term Rentals

This type of real estate investment is quite popular and these properties are rented out to long-term tenants. While finding the right tenants, collecting monthly rent, and managing maintenance calls can be overwhelming, there are a number of benefits to investing in a property as a long term rental. All associated costs, such as the mortgage and utilities, are covered by the tenant and your property will increase in value over time. This means you can sell and rent out for a higher price than you paid all while generating that extra wealth for yourself.  Plus, you can hire a tax-deductible property manager to handle the day to day operations to keep your property and tenants in check. Find out how we can help here. 

 

Choosing how to invest in real estate can be a tricky area to navigate. From big commitment projects like flipping a house to real estate investment trusts, there are a number of pros and cons when considering what is best for you. What type of asset are you going to invest in next?

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