Successful investors in any investment field know the importance of building a portfolio. Having diversified investments ensures that the failure of one particular area of the economy doesn’t wipe out everything you’ve worked so hard to build as well as building your resume and establishing your personal record of success as an investor. That becomes exponentially more important as you begin to wade into bigger investment deals that may require you to convince others to work alongside you. Here are some tips on building a successful real estate investment portfolio.

What’s Your Why?

Having a clear objective in mind is important in any venture, especially investing. Knowing what you’re hoping to achieve through asset accumulation will allow you to filter every decision that you make concerning your investment through the lens of reaching your long term goals. By clearly stating your goals and continuing to work towards them you will be able to effectively decide what type of real estate investments you want to pursue. Only spend your time and money on investment opportunities that push your portfolio towards your goal.

Diversification

Real estate is all about trends and market patterns. When one geographical area improves financially, other areas often see a downturn. If residential investments in a certain town are becoming more valuable, this often has a positive impact on commercial space as well. The old adage says “don’t put all your eggs in one basket” and that’s certainly true in real estate. In a field as finicky as real estate you probably won’t see a return on every investment every quarter. The goal should be to have your investments wisely spread out over a host of real estate types so you’re always protected.

Know Your Numbers

This sounds too rudimentary to be needed here, but it can’t be stressed enough. The backbone of your portfolio is your numbers and you need to know them at any given moment. Every decision that you make concerning how much more to spend, whether to sell a current asset or in a decision to purchase a new asset has to be based on the numbers that currently make up your portfolio. Let your data drive your decisions.

Establishing a well rounded, diverse portfolio will allow you to set yourself up for long term personal success by causing your money to work for you.