Expanding Beyond Your Market: How Privy Helps Investors Diversify

Investing in real estate can feel safer when staying close to home. We’re more familiar with local markets, which leads  many investors to focus their portfolios on neighboring areas. While this approach may seem more comfortable, it limits the potential for growth, Just as in other types of investments, diversification is key to minimizing risk and maximizing returns. Starting locally is a great way to build your portfolio, but as you gain experience and acquire properties, expanding into new markets can help you tap into fresh opportunities and safeguard against market downturns. That’s where Privy comes in. Investors  can find new investing hot spots and really answer “How’s the market?” “Where are the best places to invest?” with confidence. Privy was designed to sift through real estate data to help investors see in seconds which markets are hot, which are viable, and which should be avoided.

Our real-time nationwide data supports real estate investors at every stage of their journey, whether it’s acquiring your first or twenty-first property. Our platform boasts an extensive dataset, including direct MLS feeds, nationwide public record and mortgage data, and comprehensive rental comps and listings. 

We strive to help investors explore and navigate new markets like a local with real-time data insight.Our platform uses real-time transactional data from successful investors and applies their proven strategies to instantly surface similar profitable investment opportunities anywhere in the US. Our unique approach allows anyone to emulate the success of savvy investors, minimize risk, and increase confidence in every deal. 

The Importance of Diversification in Real Estate

Diversification is when an investor chooses different properties and investment strategies across multiple areas and asset types. For example, you might choose to invest in a four-bedroom single-family home in a rural area as a long-term rental, and acquire a run-down duplex an urban area for a fix-and-flip opportunity. Diversification also includes different funding methods, from direct ownership to partnerships to spread the financial risk across your portfolio. 

Investors who prioritize diversification can balance their portfolios to align with their financial position, long-term goals, and risk management. Successfully diversifying your real estate portfolio can optimize returns and generate consistent income to support further expansion. 

Expanding your portfolio beyond your local market adds resilience, protecting your portfolio against local market volatility and unexpected situations, such as natural disasters. As your cash flow and portfolio grows, exploring different markets is the best way to unlock new opportunities. 

Real estate investing comes with challenges that are often out of your control – from potential environmental damage to changing local regulations. Diversification unlocks your portfolio’s potential by building resilience, minimizing risk, and ensuring strong cash flow. 

Diversification Optimizes Real Estate Returns

Prioritizing diversification helps optimize your potential real estate returns. Investors can take advantage of the market conditions in different areas and tailor their strategy to different asset types accordingly. 

While overpopulated areas like cities can deliver consistent income, they often have a higher barrier to entry due to their property valuation. By comparison, investing in an up-and-coming area may present an opportunity for greater revenue with faster growth by acquiring a property before prices skyrocket. 

Investing in Different Property Types

One of the most common diversification strategies is to invest in different property types, such as residential and commercial. While other sectors – such as specialist and industrial properties – exist, these two property types dominate the industry with their own niche sub-sections. 

Residential housing includes any building used to accommodate everyday living for individuals, groups, or families. This property type includes apartments, student accommodation, individual houses, and multi-occupancy buildings. By comparison, commercial buildings can include office spaces, retail, healthcare, hospitality spaces, and mixed-use buildings.  

More established investors may also choose to invest in industrial and specialist properties. Industrial properties are typically distribution centers, warehouses, and buildings used for storage, manufacturing, or logistics. By comparison, specialist properties focus on niche sectors, such as agriculture, data centers, and supported living facilities. 

Every property type has its own risk profile, potential returns, and demand. Typically, investors can expect to see a 2-5% yield for rental properties. While commercial properties have a higher yield of 6-8%, these properties carry a higher risk profile due to the ever-changing nature of workspaces. In today’s market, specialist properties – such as data centers – provide consistently high returns due to the growing digital ecosystem. 

Investing in different strategies 

Privy supports investors looking to diversify their investment strategies and break into new specialties. Whether interested in fix-and-flip, long-term rentals, or other investment types, Privy provides customized strategies and resources to help investors understand and succeed in new niches. This feature is designed for more advanced investors seeking to expand their expertise and explore new opportunities within the real estate market.

Aligning Diversification with Investing Goals

Diversification is only successful for real estate investors who align these strategies with their investment goals. Real estate investors should determine their risk profile, target returns, financial position, and liquidity when determining which assets and markets to invest in. 

Investors who are more comfortable taking risks can focus on high-growth markets, while investors prioritizing a passive income stream should target residential and commercial properties. 

Barriers to Expanding Beyond Local Markets

Expanding into new markets isn’t without its challenges. It’s why some real estate investors never take the jump outside of their local markets. Many struggle with a lack of local knowledge, struggle with time constraints, and face data overload. Privy bridges this gap by empowering real estate investors to navigate markets with local expertise and real-time data insights using our expansive on-market and off-market investment-centric dataset. 

Regulations and Restrictions

Local regulations can cause a headache for real estate investors, even when investing within their state. Even experienced investors can find themselves caught out by ever-changing local and state regulations. Do your research before expanding into new markets, considering building codes, zoning laws, taxation policies, and any land use regulations that may impact your chosen property type. 

Working with a local real estate agent can give you valuable insights to understand current regulations and potential changes that may be on the horizon. Getting on top of local and state regulations is the first step before entering any new market. 

Data Overload

When investors take the first step into a new market, it’s easy to face data overload in a bid to catch lucrative deals before they disappear. If you’re new to real estate investing, this data can be difficult to process and understand. It’s important to break through the news and leverage data accurately to make informed investing decisions. 

Privy makes it easy to compare target properties to assess potential investment outcomes. Our data-driven approach optimizes existing data with actionable insights for more in-depth analysis to identify the best real estate opportunities in new markets.

With Privy, you’ll never miss a potential deal with instant notification of new listings that match your buy-box criteria. We’ll help you find the data through the noise to choose properties that minimize risk and optimize returns. 

How Privy Facilitates Market Expansion for Investors

Our mission at Privy is to make real estate investing more accessible with comprehensive market data, real-time insights, and user-friendly tools. We’ll support you at every stage in your journey, providing access to real-time transactional data from successful real estate investors to help you identify profitable opportunities using proven investing strategies. Privy’s comprehensive data-driven strategies open the door to new markets to diversify your portfolio. Use filters to find, analyze, and close the most profitable deals across thousands of listings that match your investing profile. The ‘Auto Deal Finder’ automatically analyzes on and off-market data for enhanced property comparison to help you make informed decisions across every market.

Actionable Data Insights into More Deal Types

Privy’s LiveCMA makes it easy to run complicated investment analyses to identify potential investment opportunities and develop your investing strategy. Explore actional data insights across multiple deal types, from fix-and-flip properties to long-term rentals and below-market properties.

Public records and lender data enhance the direct-to-MLS data for a 360-degree market analysis to support every step of your investing journey with an easy-to-navigate user dashboard. Explore off-market properties, foreclosures, and rental properties with our proprietary algorithm.

Don’t dismiss MLS data and on-market deals when expanding beyond your local area to diversify your portfolio. Different property types, markets, and local areas can offer something new for your portfolio. Diversification is crucial in a time of market uncertainty, maximizing your potential returns while minimizing risk. Read on to find out more about how you can diversify your portfolio with Privy. 

Do you want to learn more about using actionable data insights? Read our guide on why real estate investors should care more about neighborhood-level data. 

Connecting Investors with Local Real Estate Agents

Working with a local real estate agent is one of the easiest ways to explore new markets, removing many of the traditional barriers to entry. A local estate agent can help contextualize data and give you a clearer picture of a new market. At Privy, we empower investors to partner and foster relationships with Privy Pro Agents to navigate new markets and build their networks.

Read our guide on the ‘power of networking for real estate professionals’ for more advice on expanding your local and national network.

Investor Strategies for Successful Market Expansion

Diversification is key to building a successful real estate portfolio, enabling you to spread risk and optimize returns. Each property type and market will behave differently during economic situations with diversification allowing investors to maximize potential profits and return risk. 

Investors who use Privy benefit from real-time data insights for more accurate market forecasting. You can start diversifying your portfolio by letting Privy automatically identify investment opportunities that align with your portfolio needs. 

Combine Local Knowledge with Data-Driven Insights

It’s crucial to understand the local market when investing, narrowing your research down to a neighborhood level.  Diversification requires investors to combine local knowledge with data-driven insights to consider the local market without losing sight of the bigger picture. Working with a local real estate agent can bridge this gap and provide further market insights to contextualize data. 

Account for Property Management Costs

If you’re expanding outside your local market for the first time, it’s important to account for property management costs. As you expand your portfolio and enter new markets, you might find it impractical to manage a property yourself. 

Working with a property management company can streamline your operations and create a truly passive income stream by outsourcing maintenance issues. Understanding property management costs is crucial to ensuring good cash flow across your portfolio. 

Network with Local Agents and Investors

Stakeholders throughout the investing process can provide valuable insights to help you understand new markets. Prioritize building these relationships early on in your research as brokers, real estate agents, and other investors can provide access to other data sources and insights. 

Exploring the local area and engaging with business owners can help determine if the area has potential growth or is up-and-coming. Building a local network helps investors develop a better risk assessment and implement mitigation strategies. 

Leverage Data for More Informed Decisions

Real estate investing can cause data fatigue. The good news is you don’t have to be crunching the numbers yourself to leverage data insights. Privy helps you get an overview uber-quickly. 

Understanding basic real estate principles like the 1% and 50% rule for cash flow makes it easier to determine if a potential property is worth further exploring. Our blog offers in-depth advice on the most common stats and analysis, such as the sales comparison approach (SCA) to facilitate comparative market analysis (CMA).

The real estate market is constantly evolving with even experienced investors prioritizing continuous learning to support their diversification strategies. Wherever you are in your investing journey, Privy helps you leverage data for more informed decision-making.