Diversification in a property portfolio is one of the best ways to give yourself a better chance of success with greatly reduced risks. Building on the old adage that you should never put all your eggs in one basket, diversification allows you to capitalise on the positives from a range of property types, while lowering the effects of the potential negatives related to each.
With the property market having so many different arms that will see highs and lows, diversifying allows you the chance to enjoy the best of each of these worlds. For example, if one area of the market sees a sudden surge in value, you can make sure you get a piece of the action by having some money tucked away in it.
By the same token, should a certain part of the sector suddenly experience a drop, the fact you only have some money in that specific area will mean your portfolio not suffering too much.
Such a tactic, with its ingenuity and need to buy in a number of different sectors, might seem quite complicated and pricey, but it needn’t be. You can actually diversify a portfolio for less than £100,000, and you will see the benefits in the long term of putting your money in a range of different property assets.
In property terms, £100,000 might not seem like a whole lot, after all, there are plenty of homes that cost more than ten times as much on their own, but as part of a diverse investment portfolio, you can get far more than you might imagine.
For example, investing in below market value properties such as off-plan developments at the likes of One Wolstenholme Square in Liverpool with Experience Invest allows you the chance to get your hands on attractive, ready-to-let studio flats in a high-demand area for far less than you might pay elsewhere.
The fact that these are brand new and managed for you means you don’t need to spend any more over and above the cost of the unit itself for maintenance, upkeep or letting agent fees, leaving you with more money to spend elsewhere to get a diverse portfolio.
When you’re looking at where to invest the rest of your money, it’s best to try something a little different. Buying, for example, shares in a care home investment will allow you a piece of a market that’s performing well and only gaining traction at the moment, but is also different enough from the rental market that you will have some real diversity in your investment.
The same can be said for areas of the market such as commercial investments, where you can spend smaller amounts of money to purchase shares in a larger investment. Just having your finger in each of these pies can be enough to see your money go so much further, offering you a consistent and impressive return over a number of years, regardless of how different parts of the market vary in performance.