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Investment diversity: The key to financial success

By Andrew Bell

Becoming a property investor is a brilliant move to make for your future. With the impending population boom expected across the nation, now could be the perfect time to pull up your socks and begin looking into real estate in Surfers Paradise for potential investment properties. It's areas like this that have a high demand that should be looked into with the closest attention, giving you the opportunity to really secure some wonderful real estate gems. 

However, one thing that is beginning to rear its ugly head for property investors is a lack of diversity in their portfolios. Under performance is a very real risk, especially if an investor has too many of the same types of property. If one of these markets takes a hit and drops in value or rental yields and you haven't prepared for this, you can expect the value of your entire portfolio to begin dropping. 

But most investors don't give a second thought to the risks until it's too late. By getting into the right mind frame now you could save yourself future headaches and profit losses. Here are some tips to help you keep your portfolio fresh and profitable. 

Getting the right combination

If you're planning on making a career out of investment, it's always best to invest in a wide range of properties. While there are a number of arguments about whether apartments or detached homes are better, the bottom line is this: both have their benefits and downsides, but having a little of everything will help spread your investment risk around. 

Property often grows in cycles. It's not uncommon to see apartments performing better than detached houses for awhile, before detached houses see a reinvigorated market position. Here in lies the solution – take advantage of both markets when possible and spread your risk across a number of different properties. This way, when one market is under performing, chances are the other will be flourishing and keeping your overall portfolio profitable. 

Investment in different areas is a good idea

Another thing to consider is that certain markets often move in cycles as well. Capital cities will flourish depending on population movements, while regional areas can be judged based on infrastructure developments and employment opportunities. Much like choosing what types of property to invest in, where you invest should be just as diverse. 

Dipping your toes into a number of different markets will help you to take advantage of the booms and economic boosts occurring across the nation. This is why researching the future growth of particular areas is important prior to investment – keeping an eye on places that have projected infrastructure booms or population growth expectations over the coming years in order to find potentially brilliant investment locations. 

Don't put all your buyer eggs in one basket

When you set out to create your investment profile, it's only natural to have a basic idea about the type of buyer you'll be targeting. Whether they be first time buyers, fellow investors, renovators, luxury home buyers or anything in between – framing your real estate to a particular market is to be expected. 

However, in the ever-changing real estate market of Australia, ensuring you remain flexible and available to all aspects of the market is important. For example, first home buyers have been falling off the market over the last 12 months significantly, while investors have begun taking the helm.

Couple this with the impending population boom and you could find yourself in an over-saturated market in the near future – so take the time to consider other avenues of sale before then. Perhaps you could invest in more renovations for your properties and target them at richer, more luxurious buyers? The world is your oyster, so take the time to consider your options and seek professional insight before committing to any one idea. 

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