Should you diversify your investments with real estate in 2015?
We’re a big fan of diversifying our personal portfolios with assets that are not correlated – meaning that while some go up, others go down – thereby reducing volatility. Because of that, I invest in stocks, bonds, and real estate to smooth out the fluctuations of the various asset classes.
First Time Ever?
An article from Business Insider states that, if “it closes up in 2015 for the seventh year in a row, it’ll be the first time this happens ever.” And the last time that the stock market was up 6 consecutive years, the following year there was a 18% price correction.
The last time that the stock market was up for six consecutive years was over 100 years ago… that is hard to fathom.
Overall, this is a reminder that last year’s best performing asset class will not always be this year’s optimal investment.
Investing in Real Estate
So, we continue to invest in real estate at DLH Partners, LLC. We buy some homes to “fix and flip” so that we can provide clean, safe, affordable housing to families much like your own. And we also purchase properties that we plan to hold as rentals for monthly cash flow because we know that not every family is ready for the commitment of owning a home.
Either way, we strive to create “a better community, one home at a time.” Real estate investing allows us to positively impact a community moreso than any other opportunity.
Here are a couple of charts from Invesco showing the performance of real estate (using REITs as a proxy) over the past 20 years.
These asset class returns reinforce the need to diversify… diversify your stock holdings, diversify your bond maturities, and diversify into real estate.
How to add real estate to your portfolio?
There are many ways to do this. You can invest in a REIT through mutual funds or individual stocks. Or, you can do what we do… buy specific properties in stable areas of the country where you can achieve consistent cash flow. We identify opportunities where we buy at a discount, then add a little T-L-C, which provides a boost to value and creates equity (meaning the “after repair value” of the property is greater than the purchase price + rehab budget).
If you’d like more information about how you can get started, please contact us to discuss the options and strategies that we use.