Is diversification within the property market adequate or do you still to look at other options such as shares? For example, if you stuck with property you could diversify in residential, commercial, retail, CF+, CF-, capital growth, development, CBD, suburbs, regional etc.
Just a thought I had that I would like to hear opinions on.
Regards,
Andrew
itsandrew
Go as far as you can see and you will see further.
Hi Andrew,
In it's basic concept, simply owning/buying property in different locations would be the way to address this, and truly diversify. Many prefer different states too – which also makes sense. Drilling down further, different types of property would achieve this further – ie units, townhouses, and the 'bread and butter' 3/4 br house on larger blocks. Re the rest, hate to bare my sould too much on a public forum, but if I had NOT diversified in the traditional sense (ie – put money into shares instead of another property or two deposit) I would be in a much better position today – actually, a much much better position. That said, lots of people have made a squintillion off shares – but only by accident, luck, or being very 'hands on' and active.
CheersHi Andrew,
What is your strategy? Resi, commercial, development etc etc.
I agree with v8ghia that the simplest way to do it is to purchase in different areas/states near capital cities…. or purchase positive and negatively geared properties. Either way you need to understand each market of each city before you even think of purchasing in different areas, it has been covered before but a GOOD buyers agent is worth EVERY cent!Thanks for your thoughts.
Trent, the strategy I am looking at is purchasing residential properties that are positive geared now (or positive within 3-4 years) in metropolitan Melbourne. I have done one development project that I settled this month and now want to set up a passive income stream for the future. I would like to buy 3-4 properties within the next 18 months.
In terms of my diversification question I understand that commercial property has far better returns. But I dont want to take the risk of commercial property without spreading my risk across other investments. In theory they could all be in property but I am not sure if property is diverse enough.
Andrew
itsandrew
Go as far as you can see and you will see further.
Hi Andrew
I reckon diversification is critical to survival in the property game.
Some good solid investments in different locations allows the portfolio to enter "wild card" markets with minimal risk to the "mothership".
After all a sprinkle (not too much) of cheap waterfront blocks or mining town investments allows the possiblity for extraordinary capital growth, when most safer markets are in conservative mode.Cheers
Mikey P
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