Finance
What is 'portfolio diversification' in the context of Hawaii real estate investing?
AA. Investing in properties with multiple units to spread income risk
BB. Spreading real estate investments across different property types, locations (islands), and risk profiles to reduce the impact of any single property's underperformance on the overall portfolio✓ Correct
CC. Maintaining a portfolio of different colored property deeds
DD. Diversifying between real estate and stock investments
Explanation
Portfolio diversification in real estate involves spreading investments across different property types (residential, commercial, mixed-use), locations (Oahu, Maui, Big Island, Kauai), price points, and risk levels. A diversified portfolio reduces concentration risk—poor performance in one market or property type is offset by better performance elsewhere.
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