Login | November 13, 2018

Experts recommend diversity when building a real estate investment portfolio

KEITH ARNOLD
Special to the Legal News

Published: November 8, 2018

For investors who seek a high nightly rental income, Airbnb might be the best way to go.

A more stable source of income, however, would direct real estate investors to single-family properties.

Which option is better for the average investor? Well, both.

Investment experts say a strategy that mixes types of real estate is key to a successful and fruitful portfolio.

Online real estate investment tool Mashvisor noted recently that single-family homes are seen as one of the best types of real estate for several reasons - affordability, less maintenance, and better property care by tenants.

"Another reason, buying an investment property of this kind is much easier is that mortgage lenders are more than happy to finance such income-generating assets if the real estate investor puts the down payment of at least 20 percent," the site advised. "Additionally, the demand for such types of real estate is always high, resulting in such income producing assets to be described as low risk investments.

A benefit of investing in a high-occupancy property right now, is the growth market disrupters, such as Airbnb, are experiencing.

Mashvisor reported that for the year, Airbnb Columbus bookings have increased 254 percent over last year.

Owning an Airbnb investment property here would allow a real estate investor to enjoy a high occupancy rate.

Recognizing that some investors might be wary of such numbers, the site acknowledged they should be and that all of these considerations go into making smart real estate investing decisions.

"An Airbnb investment should be chosen based on the return on investment, and the location for Airbnb rentals should be one that has consistent popularity," Mashvisor detailed. "Otherwise, a real estate investor may benefit from owning an Airbnb investment for a short time and then spend the rest of the time dealing with a negative cash flow property with a low occupancy rate and a bad return on investment."

The website noted the two types of analysis real estate investors should know about before buying an investment property - real estate market analysis and investment property analysis.

The former considers current market values of comparable income properties, while the latter studies real estate metrics, performance and the market value of low-risk investments.

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