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3 for the Price of 1? The Benefits of Investing in Multiple Properties
We hear so much about bad investments but it certainly seems that real estate is one of the most sensible investments in the world. But is this actually the case all the time? Properties are a great way to help get your investment portfolio more diverse, however many investors will aspire to own more than one property. Is this a viable approach? Let’s show you some of the benefits of investing in multiple properties.
The Potential for Diversification
When you invest in one property, there will be a time when the location comes to the end of its natural life cycle. Something that unit development companies always consider is the importance of location. And it’s important to consider this when you are investing in multiple properties. When you invest in the properties and different areas of different units, such as in up and coming areas, you are always diversifying your growth. So you will always get growth out of one property.
It Improves Your Cash Flow
When you invest in one property, it certainly can slowly reap the rewards, however, investing in one property won’t turn you into a fully-fledged property developer overnight. One property does not equip you for financial freedom, as you will need to keep up with repaying the mortgage, and a lot of your income will go back into the property. When you invest in more than one property, you can use the income to pay down the mortgage and live off the spare cash. When you start to invest in multiple properties, you will have to read them out, so you can make the most from this aspect as well. Naturally, over time, each property will appreciate in value. So when it comes to selling off, after you haven’t paid the mortgage, you can enjoy the equity.
Multiple Properties Spread the Risk
If you have one property and it’s empty, can you afford to prop this up? When you have investments in multiple properties called that you are spreading the risk if you encounter the worst-case scenario. You won’t feel the impact of an empty property, so you spread the risk, and therefore, you are able to keep progressing further forward.
The Financial Security
When you invest in multiple properties, and one does particularly well, you can use the same one as a financial buffer for any underperforming properties. When you have one property, and it’s underperforming, you cannot use this as a buffer in case anything goes wrong.
It Decreases Your Debt
If you invest in multiple properties and sell them off to pay off debt, by the time you retire, you’ve got a very small and concentrated portfolio of properties without any depth. Having one property doesn’t give you access to equity.
Investing in multiple properties gives you a chance to diversify your portfolio, minimize your risk, but it’s not as simple as this. When you invest in multiple properties, you’ve got to be aware of all the risks, and do your homework. It can be the best thing for anyone looking to diversify their portfolio or leave their current working situation. But always prepare.
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Kaya Wittenburg
Kaya Wittenburg is the Founder and CEO of Sky Five Properties. Since the age of 10, real estate has been deeply ingrained into his thoughts. With world-class negotiation and deal-making skills, he brings a highly impactful presence into every transaction that he touches.
He is here to help you use real estate as a vehicle to develop your own personal empire and feel deeply satisfied along the way. If you have an interest in buying, selling or renting property in South Florida, contact Kaya today.
