FIRE – Financially Independent, Retire Early
FIRE (also known as Financially Independent, Retire Early) is a…
What does it take to build and manage a diverse property portfolio? Portfolio property management requires knowledge, patience and industry support.
A diverse property portfolio includes a mix of residential, commercial and industrial properties to diversify your investments. Diversification is a core principle when it comes to investing and applies to not just property investment, but also shares stocks and assets. By spreading your investment over different types of property, it steadies your portfolio if one market declines. This provides stability to your folio and protects it from severe losses.
If you’re new to property investing, a residential property, such as a house, unit or apartment, may make for a sensible first entry into your folio.
Starting small with something you can afford is a smart approach. One benefit of residential investing is the ability to use the equity built in one property to fund your next investment.
By investing in a mix of apartments, houses, and townhouses, you diversify your interests. This means that if one property type falls out of favour, you’re buffered by other investments, minimising risk.
Once your portfolio has built up from residential investments, you may consider exploring commercial property. Commercial properties include warehouses, offices, retail and self-employed businesses. They’re typically more expensive, and require more hands-on management and maintenance, but can carry longer lease terms, lower turnover and higher rental yield, creating what can be a secure and reliable investment when done right.
Yield refers to the difference between regular rental income and the costs associated with property management, maintenance, and other costs. A high rental yield means the property retains its status as a source of passive income. Capital Growth refers to how much your property grows in value over time. When considering property portfolio management, both have a role to play. A high rental yield keeps you in the property market for longer, while capital growth is where you can make strides, buying and selling property and transforming your wealth.
While property investment is generally considered a more stable form of investment, there are no guarantees of success when it comes to property. Building a property portfolio means knowing that you’re at the whim of the market, meaning if the market downturns, it can impact the value of your investment.
Additionally, be mindful of property deterioration. This is where working with an insurance broker is integral, as a good broker will recommend the correct setup for building insurance. What works for a residential property is going to be different from the right solution for a commercial.
From vacancy (no tenants) to property damage (bad tenants), there’s plenty to consider when choosing to invest, so choose wisely.
It’s worth getting the assistance of professionals. In addition to an insurance broker, you can also consider the services of a property manager, buyer’s agent and property adviser.
If you’re building, managing, or expanding a property portfolio in Australia, speak with a me today. We can negotiate the right loan type for you,.
This article contains general information only and does not constitute financial or credit advice. It has been prepared without considering your objectives, financial situation or needs. Before making any investment or financing decision, you should consider whether it is appropriate for your circumstances and seek advice from a licensed financial adviser. Past performance is not indicative of future results.
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