GETTING CREATIVE WITH PROPERTY

Getting creative with your property portfolio is about diversifying; spreading your risk, broadening your horizons and varying your current holdings.

In short; avoid putting all your eggs in one basket.

Luxe Commercial’s managing director Chris Sales says a diversified property portfolio allows for more balanced and consistent returns and greater flexibility particularly in the commercial market.

“Property investments are long-term propositions and by diversifying your portfolio and where your money goes provides balance and reduces the risk of any potential negative impact,” he says.

When considering diversifying, Chris suggests starting with location and price points.

He recommends picking a sector based on its risk profile, industrial being the lowest risk and retail being the highest. Vacant or partially vacant space will often represent a higher return based on the “value add” potential.  Property returns are almost always directly linked to the level of risk involved; the riskier the investment the higher its potential return.

“The best place to start is to look at investing in areas that you know well and are comfortable with,” he says.

“But putting all your money in one area leaves you open to a sudden downturn in a particular sector.”

Spreading your risk across different price points can strengthen a property portfolio and provide variety, while buying multi-tenanted investments also reduces risk.

Chris maintains quality over quantity as the golden rule, however spreading your investment across multiple properties provides flexibility and security.

“It’s not uncommon for clients to mix things up across industrial, office, medical and retail properties. Having a portfolio with a couple of conservative, or relatively safe, investments, allows for greater risk elsewhere,” he says.

“With a little creativity the opportunities to build wealth through property are endless.”

 

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