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How to Capitalize on Your Investment Property Portfolio

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As costs go up on the essentials such as food, gas, electricity and hydro, many Canadians have begun exploring ways to supplement their income both to afford day to day expenses as well as luxuries that we all simply cannot go without. For those of us who have investment property portfolios, capitalizing on those investments and getting the most for our time and money has become more of a priority now than ever before. There are many ways to do this, such as diversifying your property, considering new types of investments and even consulting with experts on what the best choice may be as far as future purchases.

Maximize Your Profit with One Word

When considering your investment property portfolio, there is one important word that will help you maximize your profit more than anything else: diversify.

There are many ways you can diversify your investment property portfolio and all of them can be very lucrative for your financial future. Take location, for example. While it is good to invest locally with smart residential and commercial purchases, some areas may prove more profitable. A home in a neighboring town or city may attract more desirable renters or may fetch a higher monthly income than one a few blocks away. Commercial properties along certain highways or roads, or featured in certain city blocks, may be more valuable than ones in your own town due to foot traffic or potential customers on their daily commute. While you will not own the business leased to the property, a better location means better rent and happy, long-term business tenants.

Another factor to consider when diversifying your investment property portfolio is type. Some property types are more advantageous than others and yield higher profits. Diversifying your portfolio to include different property types, such as commercial buildings, residential properties like apartment complexes, single and multiple family houses and other kinds of property, is a good way to ensure growth and consistency.

Investing is a gamble, though admittedly usually a safer one than a blackjack table. Because of this, it is wise for the stability and health of your financial outlook to have a diverse portfolio in the event of unexpected fall outs and changes. Diversity will allow for minimal negative impact and especially in the case of urban expansion and industry advancements, diversity can often be profitable and beneficial for your investment portfolio. Also, considering other non-commercial investments may provide a sense of security in uncertain times.

Why Residential Investment Properties are Advantageous

Home is where the heart is, but a house is what will keep you warm and dry. While this is true for whoever lives there, it can also be a very cozy property for property owners. Owning a rental property provides a stable, modest income for investors and isn’t something that should be overlooked simply because a single property doesn’t bring in the payload you might like. While perhaps one property is not a large portion of your investment portfolio, rental properties are a steady income, provided that they remain occupied.

When searching for a rental property opportunity, it is wise to understand the ideal tenant type. This depends heavily on location, but for most rental properties a consistent desired renter would be the ordinary middle-class family that has a stable income. Rental properties are very attractive to middle-class families, especially younger ones that may be saving for making their first purchase. By investing in rental properties and making them attractive to tenants that are less likely to damage property and will pay rent on time, you can maximize on this investment while providing affordable, competitive housing within the community.

One noticeable difference between residential and commercial investments is personal investment. While residential rental properties may be more time consuming, paying special attention to these investments can save a lot of money and allow for investors to efficiently capitalize on the investment. Living close by allows for owners to monitor the property and be certain that the tenants are not breaking lease policies, but it also provides the opportunity for investors to take care of maintenance and repairs without using costly third parties that may cut into the profit gained from the investment. Despite these concerns, investing in rental properties is a great way to capitalize on your investment portfolio because while it may not be a huge asset, it is a steady one.

The Benefits of Venturing into Commercial Property Investing

Increasing investment property portfolios using commercial properties may seem more risky, but by simply branching into these investments well informed, an investor can feel confident about investment choices and capitalizing on their portfolio. Like residential investments, location is essential to the capital you gain on your commercial investments. When you add commercial properties to your portfolio, it’s important to consider current and future development in the area.

For many commercial properties, it is important that they be easily accessible to customers. While this is a concern for your tenants, your property must be in a place that has enough traffic to entice long term, successful businesses so that it will produce capital for you. Urban areas that have experienced steady growth in recent years may be a good place to begin your search for your first commercial investment. While the property may not be prime real estate yet, studying and researching the statistics for the area may reveal that it is highly likely that it will be soon.

When considering commercial real estate investments, it’s also important to consider history. Over the past decade, how many businesses have opened on the property and been forced to close? If there are a lot, it could indicate that while the area may seem like it would be profitable, it actually isn’t. While this directly does not impact your portfolio, an empty building or land isn’t profitable and will cause you to lose money on your investment. In some cases however, losing a tenant may have nothing to do with the location but the business management or, perhaps the business outgrew the capabilities of the property due to the high traffic and prime area. Regardless, it is important to consider why a business has left and closely examine traffic in the area, residential properties, and other businesses. Ultimately it may not be profitable to purchase a very well priced commercial property.

Like location, it is important to consider timing. It is natural for the real estate market to experience ups and downs—moments of more expensive purchasing and also dips that might make waiting more advantageous. Several factors can affect the ups and downs of real estate purchases but, in the case of stock market or industry changes, it could be beneficial to consider purchasing.

Purchasing commercial property for investing can be difficult. There are a lot of factors that one has to consider, so it may be best for your financial health to create a board of advisors, such as a mortgage broker, real estate agent or an investment brokerage firm. All of these individuals have experience and expertise in investing and purchasing, so they may be able to assist you in making the most lucrative decisions regarding expansion of your investment property portfolio, most especially your commercial investments.

A conservative investment property portfolio may be less risky than expanding your portfolio, but it also may not be nearly as profitable as it could be. Diversifying your portfolio is one of the best ways to increase capital, but it is also a good way to ensure security in the event that something happens to compromise one or two of your investments. Expanding into residential investments is a safe way to add to your portfolio and with various types of property options, it is also an easy to find an investment to fit your purchasing needs. While more expensive, commercial properties are also a great option and often times can yield higher capital for those willing and able to invest in them. Your financial future relies on smart investing now, and there are various ways to improve your outlook for the future. Expanding your investment property portfolio is important, so is getting the most for your money.

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