Proven Ways to Reduce Risk in Real Estate Investing

Every form of investing has its risks. When you invest in commodities, you take the risk of the bottom falling out on futures. Investing in the stock market carries with it the risk that your chosen companies do not meet performance projections. In real estate, your risks run the gamut from falling property prices to not having enough cash to complete all your plans for a given property.

We work with a lot of real estate investors here at Actium Partners. In fact, you could say that most of our hard money and bridge loans go to the investment space. We have spent years getting to know our clients and how they make money. Along the way, we have learned many of the strategies our clients utilize to reduce their risk. Below is just a sampling of them.

If you need funding to realize your investment goals, consider working with us. Our hard money loans are backed by flexibility, industry knowledge, and quick funding. We take pride in being a leading asset-based lender in Utah and beyond.

Diversify Your Portfolio

Diversification is a fundamental principle of investing regardless of where you put your money. In real estate, you diversify by investing in different types of properties. We have seen clients invest in a combination of office buildings, strip malls, and multi-family apartment buildings. Each type of real estate has its own idiosyncrasies that can help limit losses in a down market.

It is also not a bad idea to diversify outside of real estate. In other words, an investor might hold a portfolio of commercial properties but also invest in mutual funds and government bonds as well. The thing to remember is that diversification is your friend.

Diversify Your Locations

Though the real estate market can be looked at through a nationwide lens, it performs differently in various markets around the country. Therefore, you can also diversify in terms of location. Invest some of your money here in Salt Lake City. Then go looking for opportunities in other high-growth markets. Maybe look in Boise, ID, Brownsville, TX, or Seattle, WA.

Educate Yourself

The worst thing any investor can do is enter a new market without sufficient knowledge. It is worse to continue in that market without an effort to learn what you don’t know. How do you reduce your risk? By constantly educating yourself. Learn the fundamentals of real estate investing before you start. As you begin building your portfolio, use every property and deal as a learning experience.

Also, use your partners as learning sources. That includes Actium, should you decide to partner with us. All your industry partners will have valuable things to teach you.

Pay Close Attention to Market Trends

Lastly, financial and investment experts certainly have some valuable knowledge to pass along but pay closer attention to market trends. Being a keen observer of market fluctuations and movement will give you a better understanding of where your investments are at any given time. Study the trends and learn from them. Let market trends help guide your decisions.

Here’s one last thing to close this post: always be prepared to lose but do everything you can to gain a positive return. Being prepared to lose softens the blow when losses do come. Doing everything you can to generate solid returns minimizes the number of losses you will experience.

Actium Partners is here to help you realize your investment goals. If you are looking to fund real estate acquisitions, we need to talk. Let’s see if we can find a way to work together.