How to Hedge Your Real Estate Investments
Any investor will want to hedge against potential losses, and real estate is no different. Many financial experts will recommend diversifying portfolios and investments, so if one investment is lost, you don’t lose all of your income. Since there are always dips and gains in investments, diversifying allows you to assume that some of your investments will do well.
That same concept can be used in real estate by investing in a variety of different real estate options beyond simply owning and renting out property.
For example, with real estate notes, you can earn a set amount from your holdings. A real estate note is essentially an IOU—a borrower’s promise to repay a loan for real estate according to certain terms and conditions. The borrower pays back the loan with interest. As the holder of the note, you get the interest.
There are several platforms that make it easy to buy notes and reap the benefits of the interest paid. This method is also flexible, since you don’t have to hold these notes for long. You can buy short-duration notes, making it a good hedge against seasonal vacancies.
Final Thoughts
There isn’t always a guarantee of a fixed income when you are a landlord. Diversifying your real estate portfolio can help you hedge against the volatility of the rental market, for all lengths of stay.
Discover how Connect Invest gives landlords a hedge against unpredictable rental income.
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