Hello so I have been doing a lot of reading online about all type of investments. I haven't yet to buy my first investment property, but I am doing some overlooks real estate portfolio. goals. Do many of you see upsides to mixing up your portfolio meaning short-term properties looking for instant cash flow adding fix and flips and holding for long term appreciation or even goals extending further of paying off these properties and holding for long term retirement or do you see if it's better to stick to one of these and go all in and make that the only strategy you use?
Diversification is great... risk reduction... but the question is, do you have the time and skill to diversify well?
Finding good buy and hold properties is a skill... so is managing them.
Being able to understand markets well enough to time them for appreciation is a skill.
Finding properties that have enough meat on the bone to flip is a skill... or locating a good wholesaler, also a skill.
Forecasting rehab costs is a skill.
Running a rehab is a skill.
Try to be great at everything and you'll likely fail at everything. Find your niche and then expand upon it. Flip houses... maybe flip every 4th to yourself through a refinance. Buy rental properties... start with rent ready and then start buying homes that need cosmetic repairs... and move from there.
I am new to investing and my strategy is to diversify as much as possible. I am currently investing in Indianapolis. I got 5 properties there and purposely bought them in different areas of the city. I also tried to diversify them with different rent ranges, ages of the home, different levels of rehab, and different risk levels.
I got conflicting advice among local investors on where and what to buy. I took it all in and decided to use all the strategies and opinions I learned. I bought 5 houses with different criteria and put them all into one portfolio. In the end they all cash flow and time will tell which investor had the best strategy and advice.
My goal now is to move into another market and do the exact same thing I accomplished in Indianapolis. The long term goal is to have 6-8 properties in 3-4 different markets. As I get more experience I may start to be more specific on what exact strategy and criteria I am interested in.
My advice is to get your first deal and continue to build. Take the leap. Experience is everything in my opinion. I have not only learned a great deal with every purchase but have made key connections in the local market to help me be successful.
Everyone has their own strategy. My speciality is buy and hold. While we have some diversity own in 3 different states and counting because of the nature of being active duty military :) That being said I am a buy and hold investor with conventional financing. 30 year loans are at an all time low, with rates starting to increase. Therefore I am trying to lock up my loans as quickly as possible. I plan on diversifying eventually.
There's no one answer to that. It comes down to what your own personal investment goals are. If you're goal is to create a portfolio of properties for long term retirement income then fix and flip isn't going to get you there. On the other hand, if you're looking for short term capital to fund long term buy and holds, then fix and flips could be a good way to do that. It all jus depends on your personal situation and goals. You're first priority should be to get crystal clear on what you want to accomplish. Feel free to contact me if you'd like help on developing a strategy.
Very true I feel like going for one niche is the best, but I want to do it all!
@Phillip Gonzales I think you will find that the markets will diversify themselves for you. At least this has been the case for me over time. Depending on market conditions you may be able to buy in a great area for a reasonable price and then that area and type of structure will change. Just try to find situations that allow you to benefit from the investment. That could all be in one neighborhood or maybe all over the city-state-country.
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