Rental Property Within Asset Allocation

2 Replies

I do not want to turn this into a real estate vs. paper asset (stocks, bonds, etc) debate.  I am new to real estate investing and have the majority of my net worth in paper assets.  

For those of you who invest in paper assets (along with real estate), how do you calculate your rental properties into your overall asset allocation?  Or, do you keep things separate?  

Any advice would be greatly appreciated.  

Aaron:

Here is my experience on the topic...

When I first started real estate investing, I set aside a small amount of my own "venture capital" to work on a small project.   Whenever I got a bonus or had saved some additional monies outside of my typical investing, I put a little more into this fund to try to buy another property.

Along the way we were always trying to get smarter about our investing and improving profits.  With real estate investing you have greater control over your investments so more ability to affect your profits.  

Fast forward a few years and it became clear that we could make much more money in real estate, with less variability, than we could at other forms of investing.    My asset allocation model is now "put as much into real estate as possible."    Unfortunately, I have 22 years with the same company, and to protect us from ourselves, the government prevents us from accessing almost any of our 401(k) savings.  I cannot access those funds until I leave the company.   So, I like to joke that if I hadn't been so diligent about funding my retirement account, I would already be retired.

Good luck.

@Greg Scott

Thank you for your response.  

I like what you said about control.  Ultimately, RE will provide me the greatest amount of control.  

I look at my retirement accounts and think to myself, "you could have X amount of paid off properties with $X cash flow right now.  What are you thinking?" 

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