BUSINESS FUNDAMENTALS
PROPERTY MANAGEMENT
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Portfolio Diversification THE RIGHT PROPERTY MANAGEMENT COMPANY CAN HELP YOU SUCCEED.
portfolio if a market underper- forms or even goes into decline. A property’s value is inextricably tied to location, and so choosing differ- ent neighborhoods, cities, or even states or regions can mitigate the risk of investing too heavily in any one market. While location is key, another crit- ical factor in property values is de- mand. Different property types rent better in different areas, depending on population demographics, local economy, and available amenities. Choosing the right property for the right location—and then finding the right tenant for it — can maximize your rental income. To achieve a diversified real estate portfolio, successful inves- tors rely on a team of real estate professionals. From lenders to real
estate agents to quality proper- ty management services, smart investing requires that you have the right people on your side. Unlike the past, when the available options for property management services were often limited or unreliable, property management today has grown to offer a range of quality services, beneficial vendor relationships, and much more. The right property management company can help investors iden- tify potential properties for sale, assess current market value, set accurate rental rates, and provide all necessary maintenance and re- pairs. They will also manage tenant relations on your behalf, negotiate leases, and help maximize your rental income for each property. Real Property Management of-
fers nationwide locations owned by highly trained professionals. There is no need to find a different property management company for each new market; chances are, one of Real Property Manage- ment’s more than 300 locations is nearby. With in-depth knowledge of their local markets and reliable, standardized systems, Real Prop- erty Management can help real estate investors large and small realize a geographically diverse real estate portfolio. • Stacy Brown is the Operations Manager at Real Property Management, which is the largest residential property management franchise organization in North America, managing tens of thousands of properties for individuals, investors, and institutions throughout the country. Learn more at RealPropertyMgt.com or call 888.806.7088.
by Stacy Brown
A
erty management company, Char can realize stable rental income every month even though his proper- ties are thousands of miles away. Perhaps the most common diversification strategy used by residential real estate investors is geographical diversity. This is because residential investors tend to specialize in the type of proper- ty they know most about, such as single-family homes. Buying rental properties in diverse locations has the advantage of protecting your
cation strategy might include any or all these approaches. A diversified portfolio can take many forms. For example, a recent MarketWatch article shared the story of Leland Char, a product manager in San Francisco who would like to own property in his hometown but hates the inflated house prices. Instead of forgoing real estate in- vesting altogether, Char opted to buy several rental houses in Texas where prices are lower, and demand is strong. With the help of a local prop-
ll investing carries a certain amount of risk. But diver-
sification helps mitigate the risks that are specific to the industry or place. Portfolio diversification works by spreading your investment dollars across different markets, which may include geographical, asset class, or risk profile diversity. Common methods of diversification include buying property in different areas or of different types or balancing stable assets with value-added or opportu- nistic assets. A real estate diversifi-
26 | think realty magazine :: september / october 2019
thinkrealty . com | 27
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