Diversifying Your Real Estate Portfolio

Want to ensure steady growth, less risk, and consistent returns on your real estate investments? Consider diversifying your portfolio!

Not all real estate investments are created equal. Investing in different asset classes, various geographical markets, and mixed asset types is a great way to minimize risk and ensure steady growth and returns among your investments.

Types of Real Estate

Residential - These types of properties are simply designed for living. Common ways investors use residential real estate for investments is by purchasing them as fix and flips, or purchasing a property and holding it as a rental to collect consistent cash flow. Included in this category are multifamily (if four units or less), single-family homes, and townhomes/condos.

Commercial - Commercial real estate is used for income generating purposes only. These are mostly larger scale properties such as hotels, apartment complexes, multifamily properties with several units, retail and office spaces, as well as self-storage facilities.

Land - When investing in land, you’ll be looking at either brownfield or greenfield. Brownfield is land that has previously been developed on and will require more inspection before new development begins. Greenfield is usually used for agricultural purposes and is land that has had no development or building activity.

Real Estate Asset Classes

Class A - Generally speaking, class A properties are found to be in sought after areas, have high-quality amenities, are newer, and are professionally managed.

Class B - One step below class A, class B properties are older, but are typically well-maintained. Some upgrades and repairs may be needed, however, they are still considered a value-add investment.

Class C - The lowest level class is class C. Usually found in less than ideal areas and in need of renovations and repairs. Due to these factors, unless updated, you would be unable to charge a high rental rate.

These classes were established by lenders, brokers, agents, and investors in order to easily communicate about different properties, the quality of a specific property and the potential risk and return associated with each.

Geographical Diversification

Real estate opportunities vary from place to place. One market may be really hot, while another area, just a few states over, is experiencing much less demand. To be a savvy investor means to not have all of your eggs in one basket. Diversifying your real estate portfolio across different geographical locations can mitigate large risks associated with holding all of your assets in the same location. If one market starts to slow down, there’s a good chance markets elsewhere are heating up.

Diversifying your real estate portfolio can feel daunting and unfamiliar at first. However, it does not have to be! Partnering with the right industry professionals when it comes to strategy, financing, and purchasing a property will make you feel confident and prepared to take on your new investment.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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