How Experienced Investors Can Diversify Their Portfolios

It’s a lesson many learn during childhood: don’t put all your eggs in one basket. Wise words that carry into adulthood and ones that seasoned investors apply to real estate. So let’s look at a few ways to do that with Luxury Mortgage products.

Focus on Multi-Unit Properties

As multi-family residential properties can offer some of the most-secure returns in real estate, it’s ideal to prioritize investment dollars there. While the costs of multi-family properties are generally higher than those for single-family homes, the financing doesn’t have to be more complicated. It’s not uncommon for a multi-family property to generate cash flow every month right away. And Simple Access® Non-QM Investor Cash Flow loans are tailor-made for these types of investments, basing approval on the money a rented property will generate rather than the income of the borrower, employment verification, or debt-to-income (DTI) ratio as many traditional loans do.

Supplement With Short-Term Rentals

If multi-unit properties are the slow-and-steady tortoises of investment portfolios, short-term rentals are the hares. Lots of experienced investors dedicate around 25% of their portfolios to short-term rentals such as vacation homes and apartments that they list on rental platforms, including Airbnb, Vrbo, and many more. And the market is red hot for vacation rentals right now. The data analytics company Airdna (not affiliated with Airbnb) reports that 2021 was a record year for short-term rental occupancy, with an average 62% occupancy in the U.S., up 5% from 2020, and up 10% from 2019. With today’s rising home prices, vacation homes can come with higher price tags, making them ideal for Full Doc Jumbo Loans that exceed conforming loan limits.

Finish Off With Flipping

Buying properties with the intent of resale is a more aggressive approach to investing. This is a highly competitive sector that’s seen a recent downturn; the property analytics firm ATTOM Data Solutions estimates that the average gross profits on home flipping in the U.S. dropped 1.6% from 2020 to 2021. But there are considerable profits to be had for those who wisely put a portion of their portfolio toward a flipping strategy in the right locations and markets. As investment property loans with Luxury Mortgage cover a wide range of property types, they’re perfect for would-be flippers.

Are you ready to diversify your real estate portfolio? If so, contact one of our loan originators today.