What Is Property Portfolio Management?

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  • Written By: Jim B.
  • Edited By: M. C. Hughes
  • Last Modified Date: 22 April 2020
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Property portfolio management is the process by which individuals buy and sell different forms of real estate and manage them as a series of investments. Some people may choose to manage their portfolio themselves, while others hire professional real estate experts to help them make decisions. The goal of property portfolio management is to meet the various financial and residential needs of the individual through various real estate purchases. A manager can seek out diversification in multiple property purchases in an effort to minimize risk when constructing the portfolio.

Many people consider their investment portfolios only in terms of the stocks and bonds which they possess. Those people fail to realize that any property ownership is a form of investment. Just like that of any other investment, the value of property rises and falls over time, and the real estate market is susceptible to the same peaks and valleys as the stock or bond market. For those reasons, astute property portfolio management can make a significant impact on the long-term financial outlook of an individual.

Of course, the difference with property value management is that real estate is a tangible possession which can be used by the person who owns it. A home with great potential for appreciation in value isn’t worthwhile if the owners don’t like living in it. Since that is the case, property portfolio management must effectively balance the financial goals that individuals have for their real estate with their more practical concerns about their living environments.

For those people who look at property ownership with a more aggressive attitude toward its investment potential, property portfolio management should attempt to find the real estate that fits the rate of return they desire. Those people looking for regular returns on their investment should consider commercial real estate, which generates revenue in the form of rental payments. This can come from tenants in an apartment complex or business owners renting out office space.

Whatever the type of property chosen by investors, property portfolio management should reflect their goals and desires for their investment capital. Those goals and desires and closely associated with an investor's tolerance for risk. Some investors might want to take on the risk of a property in an unproven area if it holds the potential for huge growth, while others might wish to play it safe with properties that have low risks attached. By diversifying a portfolio among many different types of real estate, a portfolio manager can mitigate the risks of one or even a few of the investor's properties underperforming.


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