Real Estate

Diversifying Your Property Portfolio

Diversifying your property portfolio is key to maintaining cash flow, maximising capital gains and opening up opportunities for reinvestment. Here, we look at how investors can build a diverse portfolio through direct property purchase investments.

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About the author Matt Lavin:

Owner and Director of Benoit Properties International Limited; Matt has over 16 years of experience in the international property sector, having sold over 2000 residential apartments to clients from all over the Globe.

The world of investing is always in flux. Investments which seem ideal one month can dramatically dip the next—just take a look at the turbulence of cryptocurrency stocks.

To some degree, investing in a property purchase will always offer long-term security. While property values and rental yields may fluctuate, long-term investments in property are always likely to offer solid growth.

However, it is prudent to make your property portfolio as risk-proof as possible, ensuring that, if one area of your portfolio takes a downturn, others will prop up your cash flow and overall stock value. As a result, you’ll be able to continue to leverage equity to reinvest as opportunities arise.

While there are many ways to diversify your investments as a whole, we will focus here on direct property purchase investments.

Investing for capital growth

When undertaking your financial planning model, it is best to speak to an expert about the short, medium and long term predictions for the area in which you are investing. Here at Benoit Properties International, our investment portfolio is focused on areas where research shows that long-term forecasts for growth are likely.

Residentially-let property can offer good long-term capital growth in line with the housing market norms as, aside from usual wear and tear, the tenancy is unlikely to depreciate in value through any direct result of the tenancy type.

Purchasing off plan property in areas which are set to take off can be a sure-fire way of maximising the potential of your investment portfolio, and in the right circumstances can be turned into quick returns once the building is completed.

Investing in property for cash flow

As a cash-flow vehicle, traditional rental property can offer steady returns with rental yields usually between 5% – 8% based on current values and rents.

Higher yielding investments, such as holiday lets or student accommodation, will offer greater rental incomes and, if carefully chosen, a steady income stream.

When sourcing property to generate high cash flow, it is prudent to check supply and demand for the letting type within the area. Student accommodation is an increasingly popular asset class, offering landlords the opportunity to widen their portfolio base in areas outside of the major cities, but with high demand driven by local universities.

On many of our investment properties, we can offer assured rental returns, giving you piece of mind that your cash flow revenue is protected.

Rental income can be unpredictable, and incurring void losses can be detrimental to your cash flow plan, so good management is key—talk to us about our property management services.

Investing in different areas, regions, and countries

A sure-fire way to protect your portfolio against the ever-changing demands of the market is to spread your investment geographically. While cities are always going to be areas of high demand and likely growth, the associated high cost of purchase can dissuade investors from purchasing in these areas in high volume. Less desirable areas are likely to offer slower growth; however, reasonable prices and good deals abound if you can find great off-the-market deals.

The rise of ‘Air BnB landlords’ has sky-rocketed over recent years, making investing in properties for holiday lets a more desirable proposition. While rents are likely to be higher on this type of let, associated costs such as service and management fees do mean that this can be a labour intensive or high-cost way of letting property, so again full property management is key to protecting this investment.

When choosing to invest overseas from your native country, ensure that you undertake due diligence. Some countries are notorious for having ever-shifting planning laws, unscrupulous policies and taxes that change on a regular basis. At Benoit Properties International, all of our investment opportunities are fully researched and stress-tested, making sure that your investment is safe.

Contact us today to discover our available properties around the world.