There are many kinds of property in which you can invest. You can buy residential property, commercial, industrial, hospitality and specialist. Each category has many sub-categories. For instance, with residential property you could focus on single family homes, duplexes, large-scale apartment buildings and student accommodation. Similarly in commercial you can choose between office space, retail space, storage facilities, petrol stations, veterinary surgeries and so on and so forth. It's difficult to invest in all categories of real estate. It is must smarter to focus on one or two sectors.

Apart from particular sectors of real estate, you should also carefully choose the geographic area, the price range, the age and condition of buildings, location relative to amenities and the number of bedrooms. For instance you may want to invest in three or four bedroom homes with at least three bathrooms which are no more than five years old in any of three adjacent postal codes. Or you may wish to focus on retail space in areas with consistent capital growth with at least $140 rental per square metre and where foot traffic is a minimum of 6,000 a day. Being clear on your strategy not only helps you focus but it gives your real estate agents total clarity on what you want, enabling them to meet your requirements and not waste your time.

Diversify

Diversification means spreading your money to reduce risk. The better you diversify your property holdings, the less likely you are to suffer from the poor performance of one geographic region or type of property. Spreading your investment properties reduces your vulnerability to localised market conditions.

You can diversify by investing in different types of real estate (for example commercial, residential, retail, rural or industrial) or by investing in different geographic locations (for example your own town, neighbouring towns, neighbouring states, other countries).

Landlord Central is a great tool to help you diversify geographically.