What percentage of your net worth should be invested in real estate?
I am just curious about the investors in the sub thinks is best (without providing my own view so as to not affect the answers).
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Agreed. This question is mainly addressed to investors in this forum. Especially those with many investment properties. I am wondering whether/how they are diversifying their investments and how much are they overweight on real estate.RichmondCA wrote: ↑ Odd question to ask when it's widely known the average Joe with a home will have almost their entire net worth tied into that home with some RRSP accounts as the rest (your run of the mill home owner). They don't have a choice in the matter in terms of how their networth is distributed. It's forced savings first (home), whatever they can scrub together beyond that is to max out RRSP/TFSA.
This should be asked of accredited investors and people who are actively investing, even then I am not sure what the conclusion will imply as an average is completely meaningless to anyone with a half a brain, age/risk profile/etc.
Dec 13th, 2020 1:05 pm
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Housing in general is high correlated with the stock market, chances are if the market crash, housing also won't be doing good as well.jk9088 wrote: ↑ I started off 100% stocks, then when I started RE investing I aimed to do 50/50 stocks/RE.
That went out the window due to RE appreciating faster (thanks in part due to the high leverage) so now I'm well over 50% RE...but definitely not going to sell anything to "rebalance".
Going forward though if we experience a stockmarket crash I do plan to turn my focus back to stocks and ease off on RE for awhile.
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I think it would be better to just take debt and asset calculations separately. Generally, separating debt into different categories isn't too useful (except for high interest ones such as credit card). I would just look at the total value of assists and determine the allocation from that.jaye23 wrote: ↑ would the better way to look at investment properties using the deposit paid (not market value)? Assuming one takes on a mortgage, using market value will always put an overweight on RE. So let’s say if someone has 200k of cash/stocks and wants to diversify into RE, (assuming there is mortgage room/already has a personal residence) - would it be recommended to take half or 75%?
Dec 13th, 2020 3:10 pm
I think no matter how you slice it real estate remains the best option for most which is why it's so inflated relative to fundamentals. The general population has no access to the same lucrative deals that accredited investors do so residential real estate (because of leverage) is the best bang for your buck.RaC1550 wrote: ↑ Agreed. This question is mainly addressed to investors in this forum. Especially those with many investment properties. I am wondering whether/how they are diversifying their investments and how much are they overweight on real estate.
EDIT: I think I could have worded the question a lot better: For investors of this forum, are you diversifying from real estate investments? If so, how are you doing it?
Dec 13th, 2020 3:17 pm
I am not opposed taking big risks by heavily betting in one thing if there is a very strong investment thesis. However, I have also learnt, the hard way, that over allocating in one bet can lead to a huge set back that can take a long time to overcome.RichmondCA wrote: ↑ I think no matter how you slice it real estate remains the best option for most which is why it's so inflated relative to fundamentals. The general population has no access to the same lucrative deals that accredited investors do so residential real estate (because of leverage) is the best bang for your buck.
I am not one to judge or advise people, I personally went all in on RE early on because of what the leveraged returns looked like. I've significantly diversified from RE now, but am still active, just not to the extent I was before (all eggs in one basket). I also realize when you are starting out there just isn't enough capital to be diversified so you have to make your bets and go all in to get any sort of meaningful return (this is bad advise, just reflecting on what I did).