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The Hidden Secret To Making Real Estate Profits

Investing in real estate sounds like a pretty straightforward concept that’s not too difficult. Everyone will recommend you invest in property at some point during your life as it can be the easiest thing to purchase and gain value over time. However, this leads some people to think they can just buy any house and expect to see loads of profit.

Understandably, this isn’t always the case, and there are many examples of investors that don’t make huge profits from their real estate or make losses too. This article is going to zone in on one simple secret that makes real estate investments more worthwhile and more susceptible to large profits. Without beating around the bush too much, we’ll get right into the thick of things.

The hidden secret to making more real estate profits is diversifying your investments.

Immediately, there are burning questions relating to this; what does it mean, how can you do it, and why? Fear not, all these questions will be answered and explained in as much detail as possible.

 

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What Does ‘Diversifying Your Investments’ Mean?

This simply means you don’t focus on one particular type of investment at all times. Instead, you open your eyes to the many different real estate opportunities waiting for you to take advantage of. There are many people out there that try and specialize in one particular type of real estate investment, but this is a very closed off approach.

You’ll understand more about what this means as this article progresses, as well as why it can be better for your profits.

How Can You Be Diverse In Real Estate?

To be diverse, you need to think about the various ways you can invest in real estate. The ‘typical’ investment is buying a residential property. When you talk about real estate, people automatically assume you need to invest in houses. While this is still a worthy investment, there are lots of other options you should consider to expand your portfolio. Here, we’ll point out some of the best ways you can invest in real estate so you can see the various choices you have and the sheer diversity you can enjoy.

Residential Properties

Naturally, we’ll start with the thing we’ve already mentioned; residential properties. It makes sense to invest in a home at some point, even if you’re living in it. This is an easy way to tie up a lot of money in an asset that you get a lot of use out of. Of course, you could also buy a house and flip it, or rent it out.

 

Then, you have different types of residential properties that you can invest in. Don’t assume houses are your only choice, there are many other things available such as flats/apartments and static caravans. Why opt for these? They can often be more affordable and easier to find tenants for to make money via buy-to-let.

Commercial Properties

Stepping away from residential properties and there are plenty of commercial properties you can invest in too. It’s amazing how many people completely neglect the fact that commercial real estate exists. This is probably because investors can get more from residential purchases in the sense that they can live in their home. Unless you have a business, you won’t get personal use out of commercial properties.

What are commercial properties? They can be office blocks, retail spaces, restaurants - basically anything that serves a commercial purpose.

You can make a lot of money by purchasing commercial real estate in prime locations and renting it out to businesses. There will always be a company keen to find a place to set up shop, and they tend to be long-term tenants. It’s rare that a commercial property in the middle of a busy city will be unattended for more than a few months.

Land

Now, we have an alternative to properties altogether. It’s common for people to assume real estate and property investments are the same things. In reality, real estate refers to more than just property. The actual definition of it includes land as well as properties and commercial buildings.

Why invest in land? At face value, it can be cheaper than property, and it’s possible to snag a bargain from someone keen to sell their land, which enables you to resell it for a profit. This is a rarity as you rely on the seller not knowing the true value of their land as well as any other investors not finding the same land.

The great thing about land is that you have lots of paths to go down. You can simply buy land, and then contact your local government to talk about clean energy opportunities. Some governments will pay you to have wind turbines built on your land, which can help you earn a decent amount of money with no effort at all. Alternatively, you can build houses on your land and sell them to big housing companies.

Overseas Real Estate

All these ideas work on the assumption that you invest locally, which is a good idea. However, you should also open your eyes to overseas real estate investments. Whether it’s a commercial/residential/land investment, you could make more money by doing it in a different country.

Places like Singapore have a bustling property market with their government offering affordable housing for people to purchase. They have things called a BTO launch where you can invest in flats that are built to order and normally found in prime locations. Lots of countries in Europe like Portugal and Spain also have very affordable residential real estate markets, with plenty of holiday homes and villas available to buy. Then, you’ve got countries like the UK and Japan with huge cities such as London & Tokyo that are filled with businesses and loads of commercial real estate opportunities.

If you spread your wealth across different countries, you could make more money from real estate investments by spending less.

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Why Diversify Your Investments?

Finally, we’ll ask the question you’ve all been waiting for; why do this instead of specializing in one area of real estate?

The simple answer is that diversity limits risk. Let’s say you put all your money into various residential real estate investments. You own multiple properties, and then the residential market collapses. Now, all your assets are in the same market and subject to the same loss in value. But, if you had a couple of residential investments, some commercial, a few overseas, and some land, then you’re not affected as much. The chance of all your different investments failing is much slimmer when you diversify and spread your assets around.

Another reason is that you have more choice when investing. Sticking to one type of real estate restricts your investment power as you’re only looking for one thing. You could miss out on a great opportunity to make money elsewhere if you only focus on the traditional residential property approach.

In general, people suggest that you diversify and expand your investment portfolio. Don’t just invest in real estate, invest in stocks and other things too. The same idea applies to each particular investment field too; look for ways to be diverse at all times.

 

To finish, I just want to add that this piece is not telling you to stop residential real estate investments. On the contrary, I’m saying you should add to your residential investments. Don’t just look for houses, look for commercial opportunities, land, and overseas investments too. This is the secret to making more money and seeing huge profits.

 

 

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