What is a Property Portfolio?
A property portfolio is the collection of rental properties owned by an investor. It’s similar to other kinds of investment portfolios, such as a share portfolio. However, the assets you own aren’t stocks in companies, they’re investment properties that are rented out to tenants.
As an investor, there are typically two ways to earn money from investment properties:
- Charging more in rent than you have to pay in expenses: this approach allows you to earn consistent returns and a stable source of passive income, also known as a positive gearing strategy.
- Holding a property for long enough that it increases in value: this approach is known as negative gearing and means you’ll likely earn a net loss from your rental income (but may score a capital gain when it comes time to sell).
With a balanced property portfolio, investors (like you) are able to diversify their investments across a range of property types, locations and investment strategies and lower their risk. The strong performance of certain properties can help to offset any losses you make from another rental property in your portfolio.
Plus, a property portfolio can help you build wealth more quickly than just owning a single investment property.
Like what you just read? Well, there’s a lot more where that came from
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