What does diversification look like for real estate investors?

[Jess White]

We hear so much about how we should Diversify our money and portfolios. Yet most of us here on BP beat to a different drum. We don’t depend solely on a work 401k or pension plan to be our saving grace when we are 65. We take our retirements into our own hands, and most of us don’t depend on Government to take care of us. This all being said, what the heck does being diversified look like for Real Estate investors like ourselves? What are you doing to stay diversified, or are you even diversified at all? This is a big question, so I’d love to hear various sides on this. Thanks everybody, I love having the opportunity to have conversations like this with smart people like you!

[Frank Wong]

Well, Warren Buffet said “Diversification is a protection against ignorance," "It makes very little sense for those who know what they’re doing.”

I agree with what Warren says.  I think when it comes down to real estate and diversification it's more important to be properly leveraged and have the proper reserves to withstand different economic conditions than to be diversified.  If you are properly leveraged it doesn't matter if you have all SFRs or multi-units.

I also don't think an investor should have properties all over the country. Example homes in Seattle, Houston, Memphis, and Florida.  Pick 1 or 2 and stick with it.  That's a lot of areas and time to divert your attention away.