How to Create a Diversified Portfolio of Real Estate Syndication Investments

A real estate syndication investment fund is a good means for any potential real estate investor to attain a stake in investment assets. Syndication that has a proven and diversified investment portfolio showcases a larger margin for success whilst also a lower margin for failure.

Real estate investment is a great form of investment that takes a lot of work but provides a great return on investment. Your portfolio is an important facet of your investment and having a good, and diversified portfolio, is a fantastic means to find financial success.

There is a range of factors and risks that need to be considered before making these investments. This guide will have a closer look at what syndication is, what a portfolio is, how it benefits you and your syndication, as well as how to create a diversified real estate investment portfolio.

What You Need to Know About Real Estate Investment

Real estate investment is a type of investment that focuses on real estate assets. Real estate assets come in many different shapes and forms that will vary depending on location, reason, function, and type.

Buildings and properties serve a myriad of various different functions and having a stake in real estate assets is a great means of investment opportunity. Real estate investment does a lot of market research and data analysis to locate potential beneficial investment assets that better the chances of investment growth.

Real estate investment can also range from real estate investing in single-family properties, multifamily estates, corporate buildings, storage facilities, new-build projects, and any form of estate asset that may be attainable. 

Since real estate is often quite expensive for any individual investor to attain, a syndication is formed. Syndication is a pool of investors that join their investment capital to attain a higher purchasing power.

This higher purchasing power allows the group to invest in large-scale projects and assets that would be beneficial to the group as a whole. With a high purchasing power, comes a greater need for successful and profitable investment.

Benefits of Syndication

As mentioned before, the benefits of syndication are exceptionally present within the real estate industry. Syndication is a beneficial and proven way for non-experienced and seasoned investors to attain estate assets that would provide a high return on investment.

When looking to invest in a large-scale operation such as a multifamily estate, syndication is the go-to option. The reason for this is because of the massive purchasing power required to obtain these assets.

This allows the investor’s portfolio to widen and increases the chance of success that their investment sees.

What is a Real Estate Portfolio?

A real estate portfolio is the total accumulation of your real estate market investments. This includes all of your past and present investments. A portfolio of properties is categorized by many different factors such as location, type, and classes.

A real estate portfolio is a great means for you to track your own investments as well as secure potentially beneficial investments in the future. A portfolio basically serves as your investment track record.

Having a diversified portfolio means that your investments are completely varied from one another. Although some investments may share the exact same type, an investment can be considered different based on its location.

Experienced real estate investor always ensures that their real estate investment portfolio is diversified because it comes with a list of benefits.

Benefits of a Diversified Real Estate Investment Portfolio

Having a diversified real estate investment portfolio is a great means to ensure financial success. Think of your portfolio as the old saying, having all your eggs in one basket. If your portfolio is not diversified, your investment endeavor has a higher risk of failure and difficulty. 

This can be caused due to numerous amount of reasons. Some reasons could include:

  • Social and economic issues
  • Evolving market trends
  • The shift in potential buyer and renter mindset
  • The shift in potential and renter conditions
  • Region-related current and developing issues

As well as a range of other potential risks. If you have a diversified portfolio, there is a substantially lowered risk of failure and increased potential for financial growth. Simply investing in various different property types and locations can make a massive difference in the outcome of your investment.

Creating a Diversified Real Estate Syndication Investment Portfolio

Now that we understand what a real estate portfolio is and the benefits of having a diversified portfolio, let’s have a closer and more detailed look at how you and your syndication can create your own diversified real estate investment portfolio.

Asset Class Diversification

The asset class refers to the different types of investment that exist within the property type. This often refers to the purpose that the estate serves and the functional need that it fulfills. This can range from corporate real estate to multifamily real estate.

Each asset type is different and comes with its own risks and benefits. Having different asset classes is a great way of ensuring portfolio diversity.

Corporate Real Estate

Corporate real estate refers to commercial properties that are often leased for long periods of time. This asset type is usually more stable than the rest with a great return on investment. Businesses, corporations, and other entities usually lease this asset type out so that they can fulfill their business and economic processes.

A corporate real estate asset is beneficial to any syndicate because of the consistency that it holds and the high return that it provides to its investors. This can range from office buildings to storage facilities and anything in between.

Multifamily Real Estate

Multifamily real estate refers to any investment property asset that houses a large number of people. This can range from duplexes to large apartments and rental properties. Multifamily real estate is often a favorite for real estate investors due to its high potential for financial growth. 

Syndication can often obtain a multifamily real estate asset because of the high purchasing power that it has. 

Single-Family Real Estate

Single-family real estate refers to a property that can house a single family or group of people. These are generally family homes that can be renovated and resold on the market, or they serve the most common real estate investment type of renting out.

These assets are usually easier for syndications to obtain due to the fact that they are much cheaper than corporate or multifamily real estate assets.

Mobile Home Real Estate

Mobile home parks are often overlooked due to their unsuspecting nature. In recent years, this form of real estate has seen a substantial increase in residents and needs. This type of asset allows potential renters to set up their mobile home and seek residence in its facility.

Although the turnover rate may generally be low for these real estate assets, mobile home parks have been proven to provide a fast level of cash flow.

Asset Location Diversification

Asset location is imperative in diversifying your real estate portfolio. Owning two multifamily real estate assets in the same city means that the investment type is not diversified and both investments run a higher risk of potential failure.

To diversify this, the better option would be to have two multifamily real estate assets in two different cities. This greatly increases the financial freedom that an investor may have and boosts the potential benefits that come with it.

If one real estate asset struggles because of region-specific issues, the other may not face the same issue which means that the investment as a whole is safer and more secure for the investor.

Duration of Asset Holding

The duration in which you hold an asset can also be a great means to diversify your portfolio. Let’s have a look at this using the example of single-family real estate alongside a multifamily real estate asset.

While a multifamily real estate asset is generally one that is held for a long period of time and generates wealth through rental income, the same can not be said for smaller and more intimate properties. Perhaps the reason a single-family real estate asset was purchased is as a real estate project to simply renovate and resell.

This generally means that the average hold time for this property would be around one to two years. Having various different real estate asset types that have varying lengths in hold time is a fantastic means to increase your financial growth and bring more diversity into your investment portfolio.

Investing in the Right Fund for Your Needs

Investing in the right real estate syndication fund is important. A pool of investors that make the right decision with accurate information has the potential to see a higher return on investment than one that does not.

We are a fund company that assists its investors in making the right decisions through the use of technology. We supply our clients with potential real estate assets that would have originally only been provided to institutional investors.

Whether you are a non-experienced or seasoned investor, we know just how to help take your investment to the next level. Start investing in a fund that puts you on the right path to financial growth, contact us at 949-881-7128 at Saint Investment today!