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Diversity Is Key To A Well-Balanced Real Estate Portfolio

Investing in real estate and keeping a healthy portfolio mix entails knowing the extent of risk you can manage.  Your age and status in life play a big role in determining this.  You can select investments with high risk, high growth potential while in your prime, but as you approach the golden years, waiting for an investment to grow over the long term won’t be practicable.  More conservative, low-return real estate investment may be a better option in this case.

Equally important in determining the right and a healthy mix of real estate portfolio is your intention.  Are you going to divest early on or at a much later date?

The options are varied for each investor.  While the experienced and seasoned ones advise having a diversified portfolio – a mix of commercial, residential, and mixed-use properties, the final decision rests on your preferences and capabilities.

Residential properties

In many types of investments, timing is critical.  Holding on to a real property in the medium-term (about three years minimum) is advised although according to stats very good ROI are expected within five to seven years.  It is vital too that you know when to invest and divest.

Commercial properties

Purchasing property in commercial real estate areas is one way of diversifying.  Buying retail and office spaces are two good items to bring into your portfolio.  Rental incomes per year are higher (an average of 10% of the value of the commercial property) compared with those from leased residential properties.

Development properties

Another interesting investment that routinely produces great returns is investing in pre-sale residential development projects.

“While any residential investment in southern British Columbia is wise, for the ones that understand the presale market, investing in residential developments can be quite fruitful for them.”

Mixed use properties

Investing in mixed-use properties offer a lot of opportunity for the investor.  This concept has become popular among property developers as many homebuyers will want to live in places where almost everything is within reach – offices, malls, transport hubs, and other amenities.