Even when it comes to stocks, mutual funds, and other types of investments, the experts are always encouraging you to diversify. That’s common advice, and it’s good advice. When you diversify your investment portfolio, you limit your risk and welcome different options and opportunities.
When it comes to investing in real estate, diversity is also important. With multiple types of properties and different levels of risk, you can scale your growth and increase your cash flow.
We have some tips for Dallas investors who are looking for ways to diversify their real estate assets.
Buy Single-Family and Multi-Family Properties
Single-family homes will always make great investments, especially when you’re buying rental property in Dallas and Fort Worth. These properties are in high demand with tenants and you can usually charge more rent than you’d charge for a unit in a multi-family property. Well-maintained single-family homes will do very well if there is lots of square footage, an outdoor space, and an attached garage. Your single-family home will also appreciate quickly and reliably.
To diversify your portfolio, consider investing in multi-family properties as well as single-family homes. There are many ways that this can help you earn more with your rental investments. They’re going to provide more income for you and less risk. Instead of collecting one rental payment every month, you’ll collect two or three or four. This protects you against vacancy risks. If one unit is vacant, you still have income from the other units.
Lower risk and higher cash flow are excellent reason to invest in multi-family homes as well as single-family homes. As a professional Dallas Fort Worth property management company, we know this market well. There are plenty of opportunities for multi-family investments as well as single-family acquisitions.
Consider Commercial Properties
An entire portfolio of residential properties can do very well, but if you add some commercial properties to your investment strategy, you’ll really maximize your potential for diversity. Commercial real estate often comes with lease terms that are longer and more favorable to property owners. If you buy the right property, you’ll have lower vacancy rates, higher rents, and less maintenance than with residential units. Commercial properties can be anything from retail space to office buildings to industrial or warehouse spaces. You’ll need to be willing to learn a different set of legal obligations and best practices, but commercial properties can really help you boost your portfolio’s performance.
Consider Different Financing Options in Dallas Fort Worth
Another great way to diversify your real estate portfolio is by experimenting with your financing options. Many investors pay in cash when they can, and some investors still prefer to take a traditional mortgage. You might find you can get a better deal if you try owner financing. You usually won’t need a large down payment, and if you structure the deal so that you’re primarily or completely paying the principal, you’ll find your cash flow and your ROI can improve quickly. You can also use a platform like the 1031 exchange to diversify. This is a great idea for deferring taxes and acquiring new properties.
If you’d like to talk about investment strategies, contact us at Assign Property Management. We’d be happy to serve as your Dallas Fort Worth property management resource.