Look Outside the Lines, Outside the Box, and Outside the Borders
Many real estate investors are stuck in a certain area of investment. This naturally occurs when they had previous success in a certain type of investment. There is an inherent limitation in this strategy because they miss great opportunities that may be slightly out of their comfort zone.
Specialization versus Diversification
There is strength in specialization. By concentrating on specific areas of real estate investing, the person has two outcomes: 1) They get really good at it or; 2) They fail, and the results depend solely on the niche they selected as well as the overall economic conditions.
There is more safety offered by diversification. In a diversified real estate portfolio, the risk spreads around to different types of real estate investments, such as owning a few residential rental properties, a few multi-use apartment/retail properties, and some commercial properties. In this style of investing, if one real estate sector falls down, the investments in the other sector help make up for the losses.
Real Life Example
Let me give you an example in the worldwide economic crisis. The amounts of foreclosures in America were staggering during this period. Where did those people live when thrown out of their houses? They became renters. Property owners of rental properties actually saw a boom in those times, as more and more people, forced out of houses, became rental tenants. Rental prices actually went up, especially for those landlords that chose to offer easy approval for tenants of rental properties that did not refuse people for having bad credit.
Short Sales
Another booming sector that arose during this time was the business of capturing properties for cheap, as a short sale. The short sale phenomenon continues to this day. Investors can still get in on this action. In all cases, a home sold on a short sale was at a steep discount. Investors with cash to invest at this time could buy properties for very little and turn them around to rent them easily.
Lesson Learned
In a financial disaster, there is also opportunity when one knows where to look. A literal fortune was made by real investors, who had cash and could move fast to acquire properties at bargain basement prices as a short sale. The American economy rebounded somewhat. In many cases, the homes acquired at short sale prices now sell for a profit. This is because mortgages for average people are now somewhat available again.
Being Overly American Centric
Americans tend to think solely about the USA. In fact, only about 10% of Americans have a passport. This is an ego thing and wanting to stay close to home. However, for serious real estate investors this is one of the greatest mistakes possible. Having at least a second home overseas creates a safe refuge, in case the stuff hits the fan and America faces another economic collapse. This does not help us, since we sell real estate in USA, but we want our clients to have the benefit of good advice and a good real estate investment portfolio strategy. America is still the greatest country in the world, so part of the real estate portfolio needs to be focused there and we are ready to help you find it.
Summary
What we encourage is to work with us to find the bargains in our area or your dream home in perfect condition. The bargains become a dream home with a bit of a face-lift. Just ask us about “fixer-uppers” and “short sales” to become informed about what opportunities are available. On the other hand, let us show you a home in perfect condition.