Deciding to pool all your investments into one place is akin to putting all your eggs into the same basket. And this isn’t always the best strategy. Ideally you want to balance out the weight and scope of your portfolio avoiding favoring one opportunity over another. Like the basket full of eggs…if you drop it, they all break. Diversifying your portfolio doesn’t mean you’re fully protected but you may benefit if the markets you’re investing in shift.
Diversification shouldn’t be confused, however, with maximizing your returns either. The primary focus of diversifying is to limit any substantial impact on your portfolio given the potential volatility in the market. The last thing you want is for your entire portfolio to respond to negative market flux. Your strategy should be to mitigate your risk while potentially maximizing returns by spreading out your investments over different classes, assets, markets, etc. With a 1031 exchange you can invest in different options from multifamily units to residential homes to storage to commercial real estate in the forms or REITs, DSTs, UP-REITS, TripleNet NNNs and more.
How you diversify is really up to each investor and his/her comfort level. For example, you can equally diversify across the board and have 20% invested in five different assets. Or you can mix that up with 40% in one and 20% in three investments. Either one of these scenarios provides a cushion if one or more are impacted negatively.
Our team at Diversified Investment Strategies can analyze your portfolio to help you understand your weighting options. Factors we would consider when analyzing your portfolio include the real estate property type, the property class, trends in the geographical area, potential area growth (jobs, industry, move ins), length of investment, location, etc. While it’s a good idea for anyone participating in investments to understand the basics behind diversification, we have a deep understanding of the markets along the software, expertise and experience to analyze a market’s strengths and weaknesses to help you make the best decisions for your investment goals.
Diversified Investment Strategies represents a team of experienced and trusted professionals specializing in real estate investment and services – including buying, selling, leasing, retirement planning and wealth growth and management through strategic, informed investment choices and a meticulous real estate investment analysis. As knowledgeable replacement property professionals, they help clients build a customized strategy that identifies suitable investments pursuing successful completion of a 1031 Tax-Deferred Exchange. Visit them at www.diversified1031.com or call 866-261-0104.
There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to sell any securities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney.
Diversified 1031 does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Diversified 1031 is independent of CIS.