7 Tips for a Diversified Portfolio

7 Tips for a Diversified Portfolio

  • Donna Brongiel
  • 04/5/23

Real estate is a financial asset with timeless value, and it makes a great component of any investment portfolio. While there are many ways to profit from real estate, it is generally a good idea to diversify your portfolio, no matter how much you like one particular type of real estate or investment strategy. While the question of whether to specialize or diversify will always come up for investors, diversification tends to be the safest and most reliable route for most real estate owners. If you’re wondering what your next move in real estate should be, consider allocating capital to a different type of property or setting up a new stream of revenue. This will make your portfolio more resilient to changing market conditions and give you greater knowledge and command of real estate investing in general. To get started, consider these quick tips for diversifying your real estate portfolio.

1. Take a look at multifamily properties

Multifamily properties are a great money maker for real estate investors. These properties, which include duplexes, triplexes, apartments, and other property formats, provide income from multiple rental units within the same property. While a multifamily property may not cost very much more than a comparable single-family home, they frequently offer better income. With multiple rental units providing rental income every month, multifamily properties can quickly provide excellent gains for a real estate investor.
Multifamily properties will help to grow your capital and make your real estate portfolio resilient to ups and downs in the market. Since renting a unit within a multifamily property is usually an affordable option for renters, these properties will continue to provide income during market downturns when there is not as much demand for luxury properties.
Many of my clients are now purchasing multi family units in downtown Milwaukee, 3rd
Ward, 5th Ward, etc.

2. Consider short-term rentals

Short-term rental units have become extremely popular with the rise of platforms such as Airbnb and Vrbo. Because of the ease of getting started on these and other platforms, there has been an influx of individuals with no previous experience in the short-term rental space. It is no mystery why, as short-term rentals can be very lucrative, and many individuals rent properties on a short-term basis without even needing to own the property due to subletting and other arrangements. At the same time, managing short-term rentals can get complicated, so you should get a feel for the pros and cons before approaching this or any other market segment. According to the National Association of Realtors (NAR), short-term rentals have been especially popular since the rise of remote and hybrid work. While demand for short-term rentals could be volatile over time, you may want to consider diversifying your portfolio with this option.

3. Pick up some vacation properties

Vacation rentals/Condotels can be similar to short-term rentals, except that vacation homes are a more specialized class of real estate. While any property could potentially be converted into a short-term rental, vacation homes tend to be geared specifically toward profiting off seasonal vacations and tourism. This means that when you are looking at a vacation home, you will want to consider questions such as when and for how much of the year the property would likely be rented. Owners of vacation homes in high-demand areas may enjoy considerable income just off of seasonal rentals, while property owners in other areas may see more steady rentals throughout the year. Furthermore, vacation homeowners need to consider their property’s location and value relative to competing vacation home options. One of the best parts of owning a vacation property is that you can utilize it yourself if you feel inclined.  Call Donna Brongiel to learn about the difference between condotels an vacation rentals. Overnight options versus 7 day minimum options.

4. Own properties in different market tiers

One way to diversify your real estate portfolio is simply to own homes at different financial levels of the market. For example, if you currently own luxury properties, you could pick up a couple of entry-level properties, allowing you to own more doors with the same amount of capital that you are currently investing into luxury properties. If all you own is small single-family starter homes, consider picking up your first luxury property.

5. Look into flipping homes

Flipping homes is the practice of buying a home and reselling it for a higher price. While flipping a home can be as simple as that, many real estate investors will make renovations to add to the value of a home before reselling. Like short-term rentals, flipping homes is often a real estate investor’s first foray into the real estate market. Seasoned real estate investors also sometimes flip homes, including luxury homes.
Buying homes, working on them, and reselling them is a great investment approach for those who like rolling up their sleeves and getting into projects. However, you don’t need to know a hammer from a saw in order to flip a home, as construction contractors can take care of virtually everything for you. You just handle the financial end by purchasing the home and investing capital in fixing it. Depending on how much you put in as well as particular market conditions, you can realize a handsome profit by buying homes and reselling them at a higher price.
One of my favorite things to do!!!  I unfortunately am a Zillowaholic!  I cruise the online apps to find great investment buys for many of my clients. I love a good flip!  Lucky for me I have lots of resources to share to make flips happen.

6. Branch out into new areas

While you can diversify with a new type of property or investment strategy for a stronger portfolio, you can also diversify geographically. For instance, if you own real estate in Fontana and want to build your Lake Geneva portfolio diversity, consider properties in nearby areas such as Linn or Williams Bay. You could also consider owning properties in different areas, including some suburban and some downtown properties in your portfolio.  Don’t forget when people refer to Lake Geneva, it could really mean they are looking for places in Linn, Fontana, Williams Bay or far reaching Delavan and Lake Como.

7. Work with an investment-savvy realtor

When you’re building a real estate portfolio, it helps to have some guidance. A qualified realtor can help advise you on making the right purchase decisions for your diversified portfolio. Donna Brongiel is an experienced real estate agent in the Lakes area, with additional properties in Lake Geneva, Fontana, Delavan, and Williams Bay. If you are interested in getting started in property over the border o IL , building your Lake Geneva portfolio diversity, or getting some insider Fontana/LG real estate tips, Donna can offer you a wealth of information and guidance.

Ready to enter the real estate market?

When you’re ready, talk to Lake Geneva Real Estate Team about diversifying your portfolio for stronger cash flow and better long-term results. Also, check out Donna’s neighborhood guide for additional Lake area real estate tips.

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