How to diversify like a real estate expert

By Tom de Lucy | Bricksave

October 14, 2024

News > Blog Article > How to diversify like a real …

The idea of diversification has been around for thousands of years. In fact, Talmudic scripts from roughly 3,000 years ago shared this wisdom:

Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep by him in reserve.

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Today, diversification means spreading your investments across different asset classes to reduce risk. It’s like building a safety net for your money. And when you add real estate into the mix, you’re opening the door to potential long-term gains and added security.

For example:

• Someone who invests in stocks, bonds, and real estate can benefit from different types of returns. Real estate can offer steady rental income or property appreciation, while stocks may give short-term growth.
• Crowdfunding real estate is a low-barrier way to get into property investment, making it easier to diversify even with smaller amounts of capital.

Benefits of diversifying in real estate investment

Lower your risk, balance your portfolio

The stock market can be a rollercoaster, but real estate offers a more stable investment option. By adding property to your portfolio, you’re spreading out the risk so that if one part of your investment goes down, you have something to fall back on.

Earn passive income

Real estate investments often generate rental income or appreciate over time, giving you a steady flow of cash without requiring too much effort. When you diversify across different types of properties or markets, you increase the likelihood of consistent earnings.

Invest in something tangible

Real estate is a physical asset — something you can see, touch, and feel. Unlike stocks, which can disappear in a market crash, property often retains value over time, providing a sense of security.

The risk of not diversifying: don’t put all your eggs in one basket

If you put all your money into one investment and it fails, you’re left with nothing. But when you diversify, your risk is spread across different assets. In real estate, this could mean investing in various properties or regions. That way, if one property underperforms, others may still provide returns.

How to diversify like a real estate expert

You don’t need millions to start investing like a pro. What’s key is consistency, smart choices, and making use of what you have. Here’s how you can start diversifying in real estate, no matter your budget:

A) With USD 1,000

1. Invest the full USD 1,000 in one property through real estate crowdfunding.
2. As the property generates returns, leave the earnings in your Bricksave wallet until you’ve saved at least USD 250.
3. Reinvest those returns into another property.
4. Keep repeating this cycle to slowly grow your portfolio.
5. After about four years, you’ll have the option to cash out or reinvest your gains for even more growth.

Bonus Tip: Each time you reinvest, you’re harnessing the power of compound growth, allowing your returns to multiply over time.

B) With USD 10,000

1. Split your investment: put USD 5,000 into two separate crowdfunding properties.
2. Reinvest the returns from at least one of the properties into new investments.
3. Keep repeating the process to grow your portfolio.
4. As one property appreciates, you can decide whether to cash in or reinvest those gains.

Bonus Tip: By investing in more properties, you spread your risk and improve your chances of higher, more stable returns.

Another bonus tip: Look for two different investment locations. Exploring different markets will increase the security of your investments

C) With USD 150,000

1. Purchase a whole property for USD 125,000.
2. Use the remaining USD 25,000 to invest in a crowdfunding property, preferably in a different location.
3. Reinvest the returns from your whole property, and either keep or reinvest the gains from your crowdfunding property.
4. Over time, you’ll be earning from multiple properties, ensuring a steady stream of income.

Bonus Tip: With more properties in your portfolio, you’re creating a stronger and more consistent flow of returns. This also gives you more control over your financial future.

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Conclusion

Diversification isn’t a new idea — it’s been around for thousands of years. And it’s not just for the wealthy. Property experts understand that you don’t need a lot to start investing; what you need is the right mindset and strategy. With the power of compound returns and a diversified portfolio, you can grow your earnings over time and build a solid financial foundation.