Diversify Your Real Estate Investment Portfolio in Palm Springs

To protect your wealth and earn more on the real estate investments you’re making, you have to diversify your portfolio. 

This means different things to different investors. 

For some, it means branching out into both residential and commercial property. Maybe it’s buying both single-family homes and multifamily properties. 

For other investors, diversifying means financing acquisitions a bit differently, especially now, with interest rates rising and borrowing becoming more expensive.

We always encourage the owners we work with to create a diversified real estate investment portfolio. This is one of the best ways to minimize risks and increase long term returns. 

Another excellent way to diversify is by choosing a different market to invest in. You can experiment with different types of real estate assets. 

If you’re looking for a profitable real estate market, consider Palm Springs. 

It’s no secret that California is exploding when it comes to real estate. The population is growing, the economy is strong, and everyone – whether a casual investor or a serious investor – is looking to buy a property in the sunshine state. 

Palm Springs is especially attractive because your real estate investment can easily draw long term tenants and short term vacationers. 

There are dozens of great reasons to invest in Palm Springs rental properties, and today we’re sharing some highlights so you can understand why investment properties in this market might serve you in profitable and unique ways. 

Exploring New Markets Diversifies Your Portfolio and Helps it Grow

Choosing a different market can be a great way to diversify what you currently own. It can expose you to a new pool of tenants, new rental values, and opportunities to grow your portfolio.

This is an especially good way to diversify if you’re an investor who lives in a more expensive market. Maybe you are an investor based in San Francisco or San Diego. Maybe you live in New York. You’ll find that diversifying into a market like Palm Springs can bring you a better deal. It’s more accessible. Home values are still high here, and you’ll need to plan your financing before you invest. But, there’s a lower threshold for entry than in some of California’s more expensive markets. 

When you can access good technology and you have a relationship with a local property manager, investing from out of state is easier than ever. 

Keeping all of your real estate investments in a single market is never as safe as it may feel. In fact, it creates some extra risk. 

The economy is shifting right now, and there’s no telling where the real estate market will land at the end of 2022 and into 2023. A strong market in one area of the country does not necessarily match the growth and the opportunities in other markets. Diversifying into different markets like Palm Springs protects you against relying too much on one specific city and one local economy. 

Why Choose Palm Springs as an Investment Market? 

Palm Springs is an ideal location for your next investment because it’s a destination that attracts a lot of tenants. People come to visit, they come to retire, and they come to live permanently when they want warm weather, access to southern California, and a high quality of life. This area of California is experiencing economic growth. We expect it to continue. 

Palm Springs has a strong pool of tenants. Investors won’t have to worry about whether they’ll be able to rent out their Palm Springs properties; there’s a demand for well-maintained and high-quality housing, and the renters in this community are stable, well-paid, and a reliable source of rental income.

This is also a huge tourist draw. If you find you don’t want to rent out the property you own here full-time, you can make it a seasonal or vacation rental. This is another excellent way to diversify your portfolio and get more out of what you own. 

Low Inventory, High Demand

New construction is on the rise in Palm Springs to meet the rental market’s high demand and low inventory. That’s going to help the current shortage without compromising your ability to leverage the assets you own or acquire. 

The Palm Springs rental market is healthy and stable, and there is no reason to believe it will face a downturn, even if things become less stable around the country. 

Every market has its own risks and rewards. If you take some time to get to know what we have going on in Palm Springs, you’ll see it’s one of the best places to diversify your portfolio.

Working with experienced Palm Springs property managers can help you make smart decisions. You’ll get some great advice on where the market is performing well and how you can maximize your investment.

Consider a 1031 Exchange 

One of the easiest and most popular ways to diversify a real estate portfolio is with a 1031 exchange. 

The 1031 exchange serves an effective and growth oriented long-term investment strategy. It’s an excellent strategy for investors who are looking for ways to shift their priorities, unload assets that are no longer working for them, avoid high taxes, and purchase new properties that better fit the needs of their portfolios.

Selling an income-producing property requires you to pay taxes on the money that you earn from the sale. With the market priced where it is right now, you’re likely to earn a lot of money when you sell a property. That’s a good thing, but it also means there are a lot of taxes to pay. 

Unless you buy a new investment property. 

With the 1031 exchange, you can sell one property that no longer serves your portfolio and buy another one. As long as it’s an income-producing property, you can defer the payment of those taxes. 

This is especially beneficial to investors who would face a large tax bill by selling a property. It also allows you to diversify your portfolio. If you’re selling a rental property in San Francisco, your money can go further in Palm Springs, especially when you work through the 1031 exchange. 

We have some other ideas to help you diversify your portfolio. Please contact us Xepco Properties if you’d like to talk about your own investment strategies.