Concentration or diversification

Hi all

Apologies in advance if this question has been asked, but keen to get views on the property investment approach taken by PC members - concentration or diversification and to what extent.

For example, if you like VIC and QLD, do you buy 50:50 across the states or do you buy 100% QLD if you have higher conviction. Perhaps you even go to another country - e.g. a few members seem to be active in the US.

Further to the question above, within the state itself, do you double down on one region - e.g. North Brisbane around Petrie only, or do you buy in say Ipswich and Logan based on different economic, demographic and demand drivers also.

Note: Diversifying out of asset classes (e.g. shares, bonds, alternatives, crypto) or property sectors (e.g. industrial, office) is out of scope for this question.

 

Everyone's approach is a little different. For me, I need to look at a few things first before deciding to diversify across states. No point buying 1 in Syd, 1 in Adelaide and 1 in NT if clearly Sydney is starting to rocket. I would rather diversify (in various suburbs) within the same state or states which are at an advantageous part of a cycle.

I'm more than happy to diversify across states but first the state has to be at an advantageous part of a cycle in my estimation. Otherwise, I will choose the 1 or 2 states showing most promise and then focus on getting the best deals I can and as many as I can of them.

With regards to purchasing in another country, we have done this before but only because my significant other is from China and we both understand how the real estate markets (and business in general) works there, and we have many benefits/advantages others wont have who don't have a native connection to that country. Personally I would be very, very hesitant to advise anyone to invest in real estate overseas unless they have a super sold understanding of how real estate works in that country and are not at any legal or any other disadvantages compared to natives when looking to invest.

 

It's a tricky question. I think it depends. For example, you might be looking at buying in Brisbane but suddenly as you browse across multiple threads in PC, other states might catch your attention and a property from Hobart falls across your lap where everything lines up. For e.g. I ended up not having two properties in any state because of the coincidence of deals that comes up when I keep check up on key locations (based on my discernment of each thread I read) in different states.

 

when ppl start, they might only have very limited resources, if ppl diverse wide, the growth may not be good enough to move ahead, maybe concentrating on well research areas to start, once the portfolio grow, then diverse.

in other words, when starting out, it is important to grow, once reach a certain size, it is then more important to protect.