Many investment advisers recommend diversifying your investments to spread your risk.  The theory is that by diversifying your investments, you should get a more constant return because if one investment (say shares) is not performing well, other types of investment (say property) may make up for this.  If you have all your money in one type of investment you are more at risk.

The same principle applies to property.  Many investors prefer to focus on one kind of property, perhaps in one particular area, as they are familiar with the market.  However, if you are concerned about spreading your risk through diversification you should consider investing in different types of property.

For example, if you invest only in student accommodation, you are at risk from a number of factors. A decline in international students, vacancies over the Christmas break, or political changes resulting in a change in eligibility for student loans and allowances, could result in fewer students and less demand for accommodation.  If you diversify by also investing in a home to rent to a family for example, you could lessen your exposure if any of these things occur.

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