I currently own four properties and I am looking to grow my portfolio so I can quit my W2 job. One of my properties is located in CA: I own it free and clear and it generates $800/month in pure cash flow, it is worth $380k. I believe I should sell it and reinvest the money in multiple properties in the state I live in (CO): 1) CO is a hot market 2) CO is not nearly as expensive as Southern CA. so I could put money down towards multiple properties, or a small-multi and still have money left from the sale of my CA property. It seems to make more financial sense to me. I would greatly appreciate any feedback/insight anyone might have.
Realtor · Asbury Park, NJ · Member since 2019 · 63 posts · 44 votes
4y
I absolutely recommend diversification. Much like any other investment vehicle is is good to diversify your income streams and help mitigate risk. Investing in one building only, or one town only presents a number of risks. Natural disasters, rent control, ordinances, against STR's, taxes etc all pose risk to investors in real estate. By working in different geographic areas you can help minimize this risk and will be able to exit those properties at different times for additional capital as macro or micro economic changes will have different impacts to different markets.