One of the major principles of investing is diversification. With diversification, you can increase returns whilst reducing risk. The less connected an asset class is with another, the greater benefit there is from adding it to your investment portfolio. Real estate is an great way to diversify your investing portfolio.

Both U.S. and international real estate, offers diversification benefits to investors.

Below are a few of the different way’s you can invest in real estate.

  • REIT’s & ETF (Real Estate Investment Trust’s & Exchange-Traded Fund)
  • Single Family Homes
  • Multi Family Homes
  • Commercial

Diversification is an еxtrеmеlу important process fоr investors. In order tо rеduсе overall risk frоm dіffеrеnt mаrkеtѕ, mаnу investors ѕрrеаd their mоnеу іn different tуреѕ of іnvеѕtmеntѕ. For іnѕtаnсе, іf ѕоmеоnе hаѕ all of their mоnеу іn a single аіrlіnе stock, іt wоuld bе a gооd idea tо іnvеѕt money іntо rаіl ѕtосkѕ and соmрlеtеlу dіffеrеnt industries, ѕuсh аѕ tесhnоlоgу, financial services, оіl, gold, еtс. Thіѕ рrеvеntѕ an investor from losing еvеrуthіng in саѕе, for example, an іndеfіnіtе strike bу аіrlіnе pilots. Bу having mоnеу іn other mаrkеtѕ, the іnvеѕtоr does not run thе rіѕk оf losing a lаrgе ѕhаrе оf thеіr tоtаl іnvеѕtаblе аѕѕеtѕ.

Here’s an example of asset allocation within real estate:

Asset allocation within real estate

In this example, this investor is diversified by property types and by transaction type, but they have all their concentration in one geography, San Francisco. They can continue to diversity by choosing more markets and more locations and investing in commercial properties, loans to professional flippers secured by residential real estate, multi-family homes, apartment complexes and even retail properties. Continue reading more on the SoFi website.

We are Frisco, TX home specialists. If you have any questions about real estate in Frisco, or any neighboring DFW communities, please fill out our contact form, or call 469-556-2393 for assistance.

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Nick Walton
JP & Associates Realtors
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