How do you balance your niche focus with your overall portfolio and risk management?
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Before you can balance your niche focus, you need to define it clearly. What is your unique value proposition in the real estate market? What are your target customers, locations, property types, and strategies? What are the benefits and challenges of your niche? Knowing your niche will help you identify your strengths, weaknesses, opportunities, and threats.
While focusing on a niche can give you a competitive advantage, it can also expose you to higher risk if the market conditions change. To reduce your risk, you need to diversify your portfolio across different asset classes, geographies, and income sources. For example, you can invest in residential and commercial properties, in different regions or countries, and in different types of income streams, such as rentals, flips, or loans.
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Having multiple streams of income is a key to continued growth and expansion, especially during challenging times. However, I caution anyone looking to diversify their portfolio, do your homework. Select trusted advisors along the way. Read and learn everything you can but be open to advice from trusted sources. When we begin to expand outside of our comfort zone there will be a learning curve. These learning curves could be a risk that costs you the ultimate price by losing everything. Since you will be expanding into new territories you may be unaware of certain situations, rules, or pricing. What you may think is a great deal might be pricelessly the opposite.
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In my opinion :Diversification and balance are key. Niche should be about what you truly understand. Once you achieved a well-balanced portfolio, have lowered risk while multiplying streams of income, you will be more likely to bear risk from higher risk/reward investments such as niche.
One of the benefits of having a niche focus is that you can leverage your expertise and network to find better deals, negotiate better terms, and create more value. You can also use your niche knowledge to educate and attract potential partners, lenders, and clients. For example, you can create a blog, podcast, or newsletter that showcases your niche insights, case studies, and testimonials.
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I couldn’t agree more! Personally, I have leveraged my expertise and I now have a podcast (LUXE Life), blog, website (jensellsluxe.com) and now my own brand (LUXE Life by Jennifer Williams). I have not only expanded my reach and shared my knowledge with others but also in the process have been given the official title of Influencer. Before I started sharing my knowledge, I had several people discourage me from sharing. They felt that if I shared it would take away from my success. Since I began sharing with the world, I have experienced the opposite effect! My advice is to share your expertise with others along the way. Not only will you help others but you help yourself in the process.
To balance your niche focus with your overall portfolio and risk management, you need to monitor your performance regularly. You need to track your income, expenses, cash flow, equity, and return on investment for each property and for your portfolio as a whole. You also need to evaluate your risk exposure, such as vacancy rates, market fluctuations, legal issues, and maintenance costs. You can use tools like spreadsheets, software, or apps to help you with this task.
Based on your performance monitoring, you may need to adjust your strategy to optimize your results and mitigate your risks. You may need to sell, buy, or refinance some of your properties, depending on the market conditions and your goals. You may also need to expand or narrow your niche focus, depending on the demand and supply of your target segment. You should always be flexible and adaptable to the changing dynamics of the real estate market.
One of the best ways to balance your niche focus with your overall portfolio and risk management is to learn from others who have done it successfully. You can join online or offline communities of real estate investors who share your niche interest or who have a broader perspective. You can also seek mentors, coaches, or advisors who can guide you and give you feedback. You can also read books, blogs, podcasts, or courses that teach you best practices and tips for real estate investing.
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Pessimist are often right, while optimist are often wealthy. Risk is a double edged sword that you need to navigate and understand that if would be foolish to assume you know everything. Biggest life hack I’ve found is spend time building a group of mentors, advisors, mastermind communities and sometimes just colleagues to share in the pain of the markets. Also take free advice from some random guy with a grain of salt. ????
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