As professional property managers in St. Louis, we are always encouraging our investors to diversify their real estate portfolios. Diversifying an investment portfolio is common advice because it limits your risk and provides different opportunities and better potential for growth.
If you’re not sure how to diversify your portfolio of investment property, we have some ideas for you. It might require re-visiting your investment goals and thinking more creatively, but you’ll find that you can often build your long-term ROI and increase your short-term cash flow when you’re willing to try something different.
Invest in Single-Family and Multi-Family St. Louis Rental Properties
Single-family homes are always likely to make great investments, especially in the St. Louis rental market. Well-maintained homes in good neighborhoods are in high demand with tenants. Owners know that they can charge more rent when they’re offering more space, the privacy of a detached home, and extras like a garage or a large yard. Single-family homes are also going to appreciate quickly and increase in value, allowing you to build more equity with each passing year that you hold the asset.
In the spirit of diversifying your portfolio, consider multi-family properties as well. There are many ways that this can help you earn more with your rental investments. Multi-family investments will provide more income for you and less vacancy risk. Instead of collecting one rental payment every month, you’ll collect two or three or even 10, if you invest in a small apartment building. If you lose one tenant or have to turnover two units, you’re still going to have rent coming in.
Less risk and more rental income are very good reasons to invest in multi-family homes as well as single-family homes. The additional good news is this – multi-family properties are easy to find in the St. Louis market, and a good property management company can help you identify great investment opportunities.
Diversify with Commercial Properties
If you’ve built your whole real estate portfolio on residential properties, you’re probably doing very well. However, if you want to add some diversity to what you own, there are always commercial properties to consider. This might not have been a part of your initial investment strategy, but there are benefits to commercial spaces.
Commercial real estate generally brings lease terms that are longer in length and more favorable to owners. With a good commercial property, you’ll have lower vacancy rates, higher rents, and less maintenance than with residential units. Commercial properties can be anything from retail space to office buildings to industrial or warehouse spaces. There are different rules and best practices, but a team of qualified and experienced property managers can help you navigate those changes.
Finance Your Investments Differently
There’s more than one way to finance your investment property purchases.
Many investors insist on paying in cash and others are more likely to take a traditional mortgage. You might be able to get a better deal if you try owner financing. You usually won’t need a large down payment, and if you structure the deal so that you’re primarily or completely paying the principal, you’ll find your cash flow and your ROI can improve quickly.
Other ways to diversify your real estate investment portfolio include platforms like a 1031 Exchange. You can shuffle around the properties you’re currently holding and trade them in for new investments when you want to buy something else and let go of an asset you’re holding.
Contact us at Amoso Properties when you have questions about investing in St. Louis or anything pertaining to property management.