Investment approach
One property is not a portfolio: concentration risk
Address, building, tenant, contractor and exit timing can create one connected chain of risk.
Calling real estate a diversifier does not turn one home into a portfolio. A specific asset concentrates location, building, contract, construction and sale timing.
Melser and Cotter show that diversification depends on period and portfolio structure. Relationships may strengthen in stress.
Dependency map
A permit delay postpones works, raises interest and shifts the sale. Several risk lines may be one chain. Use the downside scenario and capital calendar.
In the calculator, move timing, CAPEX and exit together. Investors cannot control the market, but they can control entry price, reserve, contracts and the decision to walk away.
Sources
Diversification does not guarantee a positive result.
Questions and answers
Does property always diversify?
No. It depends on portfolio, market, period and asset.
What is linked risk?
A chain where one event worsens time, cost and exit.
How should it be tested?
Move related assumptions together.
