Anyone who has studied or done much investing at all has heard of the principles of dollar cost averaging and diversification. These are not flashy principles or get rich quick schemes. These are methods financial planners use to make your investing strategy safer. I have began applying these principals in my real estate investing. Not only has it kept my investing fun but it's mostly working.
The way I'm applying these principles to real estate investing is two fold. First I am investing in several different types of real estate. I know this goes against a lot of gurus advice. They all preach niche investing and expertise, I don't totally disagree. I will say though it's much more interesting constantly learning about different ways to invest in real estate and learning about different markets. That leads me to the second way I'm applying these principles by diversifying the markets I'm investing in.
Up until two years ago I never would have dreamed of taking these leaps. I knew what I was doing buying 1-4 family residential properties in my market, renovating them, refinancing them and repeating. I could hit singles and doubles all day while almost never losing. I was also investing almost zero of my own cash in any of these deals because I know the market and construction costs so well. I decided I needed to change course after two years of making more money in my businesses than I ever dreamed possible and paying way too much in taxes. I needed to find larger deals that actually occupied my capital for at least a little longer periods of time. That money sitting in the bank or going to the government wasn't doing me, or anyone else a bit of good.
My first move was into short term rental properties. I did some research on markets and decided on the Orlando, FL area. This investment did fairly well for the first 12-18 months but 2020 was looming. I had March, April and May roughly 85% occupied in my single family and condo when the COVID lockdowns started. All but one of these bookings cancelled and were granted a refund. The bookings have slowly but surely crept back up, they are still nowhere near positive cash flow levels. However it is precisely because of my diversification that I've been able to weather this storm.
My second foray into other investments was partnering with @Zach Quick in a Self Storage investment in Missouri. This diversified me into a different asset class, state and municipality. It was perfect for my new strategy. It's also put at least enough money into my pocket to offset the short term rental losses. This has verified the intelligence of this approach for me and I intend to continue forward on this journey of collecting assets and markets.
My new adventure has been both networking and researching, with every waking moment, mobile home park investing. I'm also researching markets to jump into this arena very soon. More diversity, more safety, more profits coming soon. I may do parking lots next..
