Advice for diversifying

[Kaitlin Bagley]

Hi all! This is my first post, but I have been a member for the past month and have just been so grateful a friend referred me here. 

I recently sold my first primary residence and made out pretty well on it. It was doing absolutely fabulous on Airbnb, but held the majority of my assets and was on an earthquake fault line. I am hoping to disburse the profit from the sale among more Airbnb properties for cash flow. I am in Denver currently and have been toying with CO Springs as its close but feel it may be better suited for a long term stay and hold. 

I guess one of my main questions is when just starting how would you diversify your portfolio. My goal is to obtain at least 3 Airbnb's for cash flow before investing in more long term or risky flips. My husband and I plan to renovate whatever we purchase to obtain deals and because we absolutely love to remodel (yeah I know we're a bit off lol). My husband is more interested in flip's for this reason as we also can provide the majority of labor, however I am hoping for more cashflow before taking the riskier investments. 

What would you recommend for a beginner but not a rookie like us?

[Bill S.]

@Kaitlin Bagley so my idea of investing is to put all my eggs in one basket and guard it with my life. I stole that line but can't remember who said it first. My idea of diversity is to have multiple exit plans for a property. A flip should be able to be converted in to a rental or airbnb. An airbnb should be able to be sold as a flip or converted to a rental. Usually I want a minimum of three viable exit plans. In my opinion, diversification comes when you have acquired the wealth you want and then you start peeling some off into other areas if being "all in with one thing" keeps you up at night. The wealth comes from focus and concentrated effort. If you choose real estate then I have no problem with the approach of selecting one area, and one approach and hammering away at it. Again provided that you can exit a number of ways. 

Look at it this way, if all the stars do align against you and none of the exit plans work so you fail and have to start over. In reality, it wouldn't be the end of the world. You will have a lot of knowledge and can rebuild faster and better the 2nd time around.

Bottom line, don't worry about diversification in terms of asset classes when you are starting out.