Whether you have one San Diego investment property or an entire portfolio, you’re investing in real estate to make money.
One of the best way to earn more is by diversifying what you have and what you buy next. Consider how you can eliminate some risk and increase financial performance with different types of properties in different locations. If you’re not sure how to do this, an experienced San Diego property management company can walk you through your options.
At Mercer Properties, we work with multiple types of properties and different levels of risk, and we’ve found it helps our investor clients scale their growth and build their ROI.
We have some tips for investors who are looking for ways to diversify their real estate assets or planning a strategy as they begin their investment careers. We are not financial advisors, and when you’re making changes to your investment portfolio, you should always work with a professional. What we’re talking about today is based on our experience as San Diego property managers.
Consider both Single-Family and Multi-Family PropertiesSingle-family homes are usually fantastic investment opportunities, especially in the San Diego market, where there are some great neighborhoods and growing suburban areas. Single-family homes are always in high demand with well-qualified tenants. You can also charge top rental prices, especially if the home is well-maintained and offers plenty of space, a yard, and a garage. This type of investment will grow in value quickly, providing you with a lot of future financial security.
You can diversify your portfolio by purchasing multi-family properties, which can help you earn more on your rental properties. These properties will provide more income and less risk. How? Because 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.
Consider Commercial Properties in San DiegoYour portfolio of entirely residential properties has the potential to do very well, but if you include a collection of commercial properties, you’ll maximize your portfolio’s diversity. Commercial real estate delivers owners more favorable lease terms that are usually for longer periods. With the right commercial space, you’ll enjoy lower vacancy, higher rents, and fewer maintenance expenses because tenants are usually responsible for them.
Look for San Diego investment properties in the commercial space that are office buildings, retail centers, and even warehouse or industrial properties. These investments come with unique legal requirements and best practices, but they may work in your real estate portfolio.
Diversify and Leverage San Diego InvestmentsAnother great way to diversify your real estate portfolio is by experimenting with your financing options. A 1031 Exchange, for example, can help you “trade up” to higher performing assets while deferring your tax liability to a future date.
Some investors pay in cash and others take a traditional mortgage. You might be able to 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.
These are just a few ways to think about diversifying your portfolio, and remember that a good property management company can help you strategize your investment goals. Contact us at Mercer Properties for more information. We’d love to be your San Diego property management resource.