What percent of your assets do you have in investment property (excluding your personal residence)?

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masonstone
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What percent of your assets do you have in investment property (excluding your personal residence)?

Post by masonstone » Fri May 31, 2019 11:03 am

I'm thinking about what percentage of my assets I should have in investment properties. What percentage do the bogleheads feel like is appropriate?

miamivice
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by miamivice » Fri May 31, 2019 11:04 am

We have 330k, or 16%, of our total assets in real estate, excluding primary house. In our case, it is timberland.

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masonstone
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by masonstone » Fri May 31, 2019 11:10 am

miamivice wrote:
Fri May 31, 2019 11:04 am
We have 330k, or 16%, of our total assets in real estate, excluding primary house. In our case, it is timberland.
Interesting, do you get dividends from the timber cut from the land?

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by ruralavalon » Fri May 31, 2019 11:13 am

masonstone wrote:
Fri May 31, 2019 11:03 am
I'm thinking about what percentage of my assets I should have in investment properties. What percentage do the bogleheads feel like is appropriate?
Personally, zero.

I don't feel that investing in real assets is inappropriate, I just don't do that.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by livesoft » Fri May 31, 2019 11:15 am

I've had zero percent my entire life. I have friends that have had rental properties and commercial real estate. From them, I hear about the good and bad. I've done fine without them, so I feel I don't need them.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by jj » Fri May 31, 2019 11:17 am

None.

And not looking for a part-time job in retirement.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Chris K Jones » Fri May 31, 2019 11:17 am

Zero. I have never owned investment property. I sold my home about 2 years ago. I don't own any real property at the moment. I plan to buy another home in the next few years and it will be less than 10% of my net worth.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by adamthesmythe » Fri May 31, 2019 11:18 am

0

Don't want to be a landlord...I had a job before...now I'm retired.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by renue74 » Fri May 31, 2019 11:18 am

Just had a conversation about this last week. We own 9 rental properties and a full time airbnb. (All properties are owned. No mortgages)

It's approximately 26% of net worth.

Throw in primary residence and all real estate is about 40% of net worth.

We live in a "bedroom" community of Charlotte. The northerners are coming down with a vengeance and inflating property values and straining infrastructure at the moment.

For example...last January, I bought a 2 bedroom condo for $89K. Today it's worth $130K. 46% increase in one year? It's stupid and worse than 2005. We have good tenants placed there and I haven't seen the place since last summer.

My long term plan is to hold rentals for 10 years and then slowly cash out.

I get the fever to buy new rental property or flip property every day....but I'm working on 2 major rehabs right now and I don't wish to increase my % of real estate owned.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mmmodem » Fri May 31, 2019 11:20 am

29% of our assets are in rental property. The appropriate amount for me is 0%. I would sell today if I could but circumstances as they are, prevent this. My primary home is more than enough real estate exposure for my asset allocation. If I did not own a home or felt I needed more real estate exposure, I would purchase REITs.

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masonstone
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by masonstone » Fri May 31, 2019 11:22 am

mmmodem wrote:
Fri May 31, 2019 11:20 am
29% of our assets are in rental property. The appropriate amount for me is 0%. I would sell today if I could but circumstances as they are, prevent this. My primary home is more than enough real estate exposure for my asset allocation. If I did not own a home or felt I needed more real estate exposure, I would purchase REITs.
Why do you dislike having rental properties?

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by goodenyou » Fri May 31, 2019 11:28 am

I had roughly 10% of my assets in commercial property that was owner-occupied by my business. We just sold on a sale-leaseback and I liquidated my position. I like the liquidity. I bemoaned ownership for many years. All in all, it worked out ok. I don't want to go back into it now.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by jebmke » Fri May 31, 2019 11:30 am

Zero now; one of the happiest days of my retirement was the day we sold our rental condo.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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masonstone
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by masonstone » Fri May 31, 2019 11:33 am

jebmke wrote:
Fri May 31, 2019 11:30 am
Zero now; one of the happiest days of my retirement was the day we sold our rental condo.
The tenants were giving you headaches?

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by jebmke » Fri May 31, 2019 11:36 am

Things always seem to happen the day before you go on vacation or right as you are about to have dinner. We tried two different management companies but they weren't all that helpful.

If you manage RE yourself, you need to impute a management fee as personal income and deduct if from the rental income in order to properly evaluate the return on the actual RE investment as an asset. Many people don't do this and overstate the returns they are seeing on their investment.
Last edited by jebmke on Fri May 31, 2019 11:37 am, edited 1 time in total.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by miamivice » Fri May 31, 2019 11:36 am

masonstone wrote:
Fri May 31, 2019 11:10 am
miamivice wrote:
Fri May 31, 2019 11:04 am
We have 330k, or 16%, of our total assets in real estate, excluding primary house. In our case, it is timberland.
Interesting, do you get dividends from the timber cut from the land?
I would get to keep the revenue generated from selling timber, however, there are no planned timber harvests in the foreseeable future.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by ruralavalon » Fri May 31, 2019 11:37 am

masonstone wrote:
Fri May 31, 2019 11:22 am
mmmodem wrote:
Fri May 31, 2019 11:20 am
29% of our assets are in rental property. The appropriate amount for me is 0%. I would sell today if I could but circumstances as they are, prevent this. My primary home is more than enough real estate exposure for my asset allocation. If I did not own a home or felt I needed more real estate exposure, I would purchase REITs.
Why do you dislike having rental properties?
Rental real estate is not just an investment, it is also a job. The job can be time consuming and an aggravation.

When buying a new home, our local real estate market collapsed leaving us temporarily unable to sell our old home. For several years we were forced to be a landlord renting out our old home. I didn't like being a landlord one bit.

With rental real estate you need to screen tenants, handle complaints, do repairs and maintenance, pay bills for utilities taxes and insurance, or else pay someone to do that for you. I don't ever want to.do that again.

I am retired, and don't want a job to do.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mmmodem » Fri May 31, 2019 11:48 am

masonstone wrote:
Fri May 31, 2019 11:22 am
Why do you dislike having rental properties?
I think rental properties are more risk and more work for more reward. I'm not willing to put in the work or take the risk. I've had too many friends and families get interrupted in the middle of social gatherings to tend to a tenant. My sister claims it's easy to manage for her. To each their own.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by jebmke » Fri May 31, 2019 11:51 am

Hard assets are also harder to unwind when you die or have some other significant life change -- whether it is a spouse who no longer wants to hold them or other survivors, heirs, transferees.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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masonstone
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by masonstone » Fri May 31, 2019 11:51 am

mmmodem wrote:
Fri May 31, 2019 11:48 am
masonstone wrote:
Fri May 31, 2019 11:22 am
Why do you dislike having rental properties?
I think rental properties are more risk and more work for more reward. I'm not willing to put in the work or take the risk. I've had too many friends and families get interrupted in the middle of social gatherings to tend to a tenant. My sister claims it's easy to manage for her. To each their own.
Shouldn't a management company handle the tenants complaints?

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Jack FFR1846 » Fri May 31, 2019 11:56 am

Zero

When I went away to grad school, I rented out my house. I filled the 275 gallon oil tank. There was a tenant change after a year. When I got home after 2 years, the tank was empty. I asked the tenant to pay for an oil fill up and they refused saying "the previous tenant gave us the oil".

Great.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Vanguard Fan 1367 » Fri May 31, 2019 11:59 am

I have about 10 percent of my assets in investment property. With Mr. Toad's wild ride in the stock market that percentage changes a little every day.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Vanguard Fan 1367 » Fri May 31, 2019 12:03 pm

Jack FFR1846 wrote:
Fri May 31, 2019 11:56 am
Zero

When I went away to grad school, I rented out my house. I filled the 275 gallon oil tank. There was a tenant change after a year. When I got home after 2 years, the tank was empty. I asked the tenant to pay for an oil fill up and they refused saying "the previous tenant gave us the oil".

Great.
I hope that after eating the thousand dollar bill for the oil that you still made a nice profit on your rental property.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Wyodoc » Fri May 31, 2019 12:05 pm

About 30% in real estate mixed between syndication and a few single rentals. Use a management company. I have experienced good returns, plenty of tax depreciation, no headaches. Overall happy.

The mantra on here is real estate = headaches. IMO I believe there are plenty of ways to benefit from real estate without headaches.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by FelixTheCat » Fri May 31, 2019 12:12 pm

28% and I would like to have more.

Property is as easy as a Boglehead portfolio with the right property manager. I get a nice monthly dividend (rent), property value increases by 4% on average each year AND it lowers my tax bill due to property depreciation. The only problem is property isn't liquid.

IF I ever run out of $$$ from my Boglehead portfolio, I can sell the property.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Glockenspiel » Fri May 31, 2019 12:14 pm

Zero. Unless some of my index funds are invested in REITs or something.

student
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by student » Fri May 31, 2019 12:25 pm

0. I do not have the fortitude to invest directly in real estate.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by DVMResident » Fri May 31, 2019 12:26 pm

I’m not sure the ‘correct’ or optimal amount of RE to hold is. As Bogleheads favor cap weighed indexes, that might be a place to start. The cap weight of the world’s real estate is >$200trillion vs the total world equity market $78 trillion (granted the pricing includes some RE holdings as well). Being internally consistent with the concept of cap weighting would put RE at roughly 3x equity holdings. On a practical note, RE is more difficult to access and diversify (REITs not withstanding) and therefore the asset class is commonly skipped on the consumer level.

Personally, I’m opportunistic when approaching RE. RE is not efficient, especially for small scale housing. There are lots of opportunities to make good buys, build in appreciating areas, add sweat equity, etc that are just as not available in the equity markets (to me) coupled with cheap leverage.

My holdings have been as high as 42%, when I decided to sell (too much equity from the bull RE market). Now it is 0% because my market is overpriced. I will buy when I see another opportunity.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Dottie57 » Fri May 31, 2019 12:33 pm

ruralavalon wrote:
Fri May 31, 2019 11:13 am
masonstone wrote:
Fri May 31, 2019 11:03 am
I'm thinking about what percentage of my assets I should have in investment properties. What percentage do the bogleheads feel like is appropriate?
Personally, zero.

I don't feel that investing in real assets is inappropriate, I just don't do that.
+1.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Oddball » Fri May 31, 2019 12:56 pm

About 30%. Been a self-managed landlord for the past 5 years and been pretty happy about it, hope to get a couple more units (have 3 now) in the next couple of years.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Dave55 » Fri May 31, 2019 12:59 pm

Zero now. Was at about 25% of overall assets in commercial RE (multi family, office, retail, storage) from early 90's until about 10 years ago.

Dave


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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Presintense » Fri May 31, 2019 1:05 pm

masonstone wrote:
Fri May 31, 2019 11:03 am
I'm thinking about what percentage of my assets I should have in investment properties. What percentage do the bogleheads feel like is appropriate?
Zero, unless you include a very minor fraction in REIT.
Performance = Potential - Distraction

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by SevenBridgesRoad » Fri May 31, 2019 1:09 pm

jj wrote:
Fri May 31, 2019 11:17 am
None.

And not looking for a part-time job in retirement.
This.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by alpenglow » Fri May 31, 2019 1:17 pm

I have about $100k in timberland. Excluding primary residence, that is about 10% of assets. Thus far, it has cost me money in maintenance and property taxes. Maybe some day it will turn a profit, though I doubt it. At this point, I wish I hadn't made the purchase, though I'm going to give it more time.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mchampse » Fri May 31, 2019 1:22 pm

Jack FFR1846 wrote:
Fri May 31, 2019 11:56 am
Zero

When I went away to grad school, I rented out my house. I filled the 275 gallon oil tank. There was a tenant change after a year. When I got home after 2 years, the tank was empty. I asked the tenant to pay for an oil fill up and they refused saying "the previous tenant gave us the oil".

Great.
In fairness to your tenant, they used about 1/2 of the oil and you were asking them to fill the entire tank. I presume you had a security deposit from them and could have deducted the cost of the oil they used and it would be on them to recover that from you.

The experience is a bit of a lesson learned. There is a local property owner association that gives out a 20 page lease for their owners to use. Reading through you can tell that a lot of clauses got added because another property owner got burned by something over the years. Oil tanks aren’t common in my area, but I’d bet the lease they hand out requires tenants to refill the tank when they leave.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Wiggums » Fri May 31, 2019 1:28 pm

Just a primary residence, so Zero

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by TheOscarGuy » Fri May 31, 2019 1:42 pm

masonstone wrote:
Fri May 31, 2019 11:03 am
I'm thinking about what percentage of my assets I should have in investment properties. What percentage do the bogleheads feel like is appropriate?
0%? :D.
Are you asking how much leverage is OK to have in investments? Many on BH don't have any investment property (myself included) and get by just find. :happy

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mikemikemike » Fri May 31, 2019 2:31 pm

About 10% of NW is in REITs. Don't own any investment properties directly.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Rus In Urbe » Fri May 31, 2019 2:35 pm

Our primary residence is 7.5% of our NW.

Outside of that, we have 0% in direct real estate; we hold about 5% REITS and other RE related investments.

Currently not a huge fan of RE.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by PQ12$ » Fri May 31, 2019 3:01 pm

53% equities
23% bonds
7% cash
20% RE investment property

The 20% is a house we bought from my mother in law that our son is currently renovating/living in with his wife/baby for reduced rent. I made a deal where he does the work as he can, gets below market rent and will share in profit when we sell in 5 years or so.

Honestly I just wanted a safe place to park the money, and can't tell you how happy it makes me to be doing something with cash that I can see the benefit of - as opposed to blips on my computer screen. House is in a suburb of Boston that weathered 08/09 well so I figure the money will be there when we need it. Love seeing my grandkid, daughter in law safe, happy, etc.

I am a Boglehead but no way do I want all my money in the market regardless how diversified that bet is - total market, bond, etc. Would I be a traditional landlord? Probably not as I am not built for it.

You might be -- but expose yourself to all the naysayers on this site because many earned their negativity the hard way!

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mancich » Fri May 31, 2019 3:06 pm

Zero. Not retired yet and DW and I are busy enough with dual careers and 3 kids.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Broken Man 1999 » Fri May 31, 2019 3:30 pm

Zero.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by PVW » Fri May 31, 2019 3:35 pm

Zero. Owning investment property goes against my desire to keep my investments simple.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by ChrisC » Fri May 31, 2019 3:36 pm

renue74 wrote:
Fri May 31, 2019 11:18 am
Just had a conversation about this last week. We own 9 rental properties and a full time airbnb. (All properties are owned. No mortgages)

It's approximately 26% of net worth.

Throw in primary residence and all real estate is about 40% of net worth.

We live in a "bedroom" community of Charlotte. The northerners are coming down with a vengeance and inflating property values and straining infrastructure at the moment.

For example...last January, I bought a 2 bedroom condo for $89K. Today it's worth $130K. 46% increase in one year? It's stupid and worse than 2005. We have good tenants placed there and I haven't seen the place since last summer.

My long term plan is to hold rentals for 10 years and then slowly cash out.

I get the fever to buy new rental property or flip property every day....but I'm working on 2 major rehabs right now and I don't wish to increase my % of real estate owned.
Funny: I also live outside of Charlotte, and my real estate investment property is 26% of net worth and when I also throw in my primary residence, my real estate holdings become 40% of net worth. However, my real estate investment is a 1-4 family brownstone bldg in a Landmark District in NYC, which my siblings and I inherited from our parents and it's the bldg in which we lived as children. Its value has increased exponentially over the years since 1962 when first purchased by our family.

We have had recent challenges in managing the bldg, including a facade renovation that will likely cost us $180K, when completed in July. It throws off good rental income, but it's becoming a family issue as management disproportionately falls on 2 siblings, and major electrical or plumbing issues are on the horizon. The bldg was built in 1900. If I could buy out my siblings, I'd do so but this would likely cause family resentment and strain my own resources. We have decided to sell this bldg, which will also secure financing one of my sibling's retirement.

I've been a landlord before for other rental property in the DC area, and it worked out well for us -- though we were involuntary real estate investors in that property; from my standpoint, being a landlord sucks!

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by mmmodem » Fri May 31, 2019 8:52 pm

masonstone wrote:
Fri May 31, 2019 11:51 am
mmmodem wrote:
Fri May 31, 2019 11:48 am
masonstone wrote:
Fri May 31, 2019 11:22 am
Why do you dislike having rental properties?
I think rental properties are more risk and more work for more reward. I'm not willing to put in the work or take the risk. I've had too many friends and families get interrupted in the middle of social gatherings to tend to a tenant. My sister claims it's easy to manage for her. To each their own.
Shouldn't a management company handle the tenants complaints?
If one wants to decrease their profits, sure. Would do nothing for risk.

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Sandtrap
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Sandtrap » Fri May 31, 2019 9:03 pm

At one time for many many many decades, 100% . . R/E income property development, apartment buildings, and condos. 80-120.
All self-managed.
It was my company "business". We had a "knack" for it. Did okay.. . . . It was great fun. But lot's of work 24/7.

Over the last 10 years moved to nearly 90+ % investment portfolio, 10% R/E income property.

If R/E crashes again, I'd "maybe" be willing to increase holdings. Perhaps purchase 1-2 buildings.

I've thought about REIT's but still reluctant vs the real thing.

But, for now, enjoying retirement. :D

j :D

*Actionably: as often reiterated on the forum, R/E income property is a "business" and can be done well if one is inclined and highly motivated. Lacking that, try REITS.
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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by DPT » Fri May 31, 2019 9:30 pm

80% of investable assets in income producing property. The real estate is my retirement income and I am not dependent on the stock market. It could go away and my lifestyle wouldn't change at all. I don't personally manage the real estate so make a little less return on investment, but, for me it's worth it not having to deal with tenants.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by Gnirk » Fri May 31, 2019 9:46 pm

None. We have a second (snowbird) home, but do not consider it an investment property.

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Re: What percent of your assets do you have in investment property (excluding your personal residence)?

Post by retiredflyboy » Fri May 31, 2019 9:59 pm

About 70% real estate (farm land and two rental homes) 30% financial assets.
Facts are stubborn things. Everything works until it doesn’t.

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