Portion of your NW in real estate

[Bamaman]

I've been retired 12 years, and don't even think about N/W. Neither my main home or my lake house is considered an investment.

If I happened to get short of money, I could sell the lake house and live another 10 years. It's been in the family since 1945, and I'd hate not to pass it on to the 5th generation to use it. The 6 mile sunset view is priceless.

 

[racy]

We have a combination of RE. Our home is paid-off but only counted in our net worth and valued at it's 2003 build cost, about 9% of total NW.
For investable assets, we have a REIT equity fund, farmland trust deed debt and bridge loan debt. We (want to) believe that RE is a separate asset class from stock and bond funds. These are around 10% of our total investment portfolio.

 

[jazz4cash]

I don’t ever think about net worth. We have a home with two mortgages and a sliver of a REIT in the portfolio. I have a strong desire to be involved in rental property to help grown children acquire property. I’m too old to do most of the required work, though. Personally I’m thinking about partnering with an experienced flipper or taking the easy way out by investing in a crowdfunding group.

 

[Joylush]

I have 40% of my net worth in real estate. This has been reduced from about 60% over the last few years. My hope is to get that down to 10% one day.

 

[foxfirev5]

I don't bother to calculate NW. The liquid investment portfolio is all that counts right now. Our primary house is for living and the second home for leisure. Eventually both homes may be part of plan D or E LTC or legacy. Who knows how it will work out? I could get a crazy offer on the lakehouse tomorrow and take the cash. Or not.

 

[Stormy Kromer]

Farmland accounts for about 15% of my investment assets. I consider it fixed income. It pays a steady 3.25% after property taxes. Virtually no headaches and it keeps up with inflation very well.

 

[dixonge]

Zero in Real Estate. Sold home and now full time traveling. No REITs either.

Same

 

[NgineER]

About 1/3 of NW in RE, five duplexes/triplexes and primary. About 50% Equity across the properties. I use Zillow for value on primary (a little low) and 100x monthly rent for income generating properties (also conservative in my town). Not retired yet but starting to think about it. Generating >100% of current spend, but want/need to spend more in retirement. No plan on selling yet.

 

[JRon]

We have investments in apartments & hotels thru limited partnerships totaling about 30% of our NW, not counting our paid for home. Looking at a REIT investment right now that invests in apartments, retail and office as an alternative to bonds. I view all these as fixed income investments.

 

[calmloki]

Lowest for the rental real estate value is 20% of NW. That is using the tax man's "Real Market Value", which is way low on apartments. If we sell another 8-unit this year and use a rental factor of 6*annual rent for last year we will be down to 14%. This does not include real estate loans or contracts for property we've sold on which we are carrying the contracts. Primary and secondary homes are about 10% of NW.

 

[street]

street, it sounds "priceless" to me.

When I'm not there I want to be there. Priceless is a great word and can't imagine not owning it. If I sold it today I would get 7 to 8 times more then what I paid for it.
The absolute best investment and decision I every made, except my decision to marry my wife 38 years ago.

I will add that the ranch hasn't been the best of value land that I have bought, even thou it is 7 to 8 times more now. But it has been the most enjoyable investment that I have ever done. I sold a small farm for 14 times more then what I paid for it, so more profit but less enjoyable.

 

[PoorOldCountryBoy]

Investment portfolio usually has 10-30% RE and related investments. You need to be very choosy right now with rising rates--make sure you get growth properties with pricing power. I'm at about 10% right now, but will scale in a little more as the economy reactivates. House is paid for but very seriously considering taking out 3% money for the next 30 years. If rates go back up to 4%, it will be very cheap money.

 

[pjigar]

Over 50% in RE. Tracked at zillow price!

 

[ExFlyBoy5]

Tough to value since I also have a COLA protected (and pretty much guaranteed for my life) that can be tough to value. Add in the fact that almost all our "true" investments sit in VTI (not sure what % of that is some sort of R/E holding) then it's even more convoluted.

But, if I apply my pension income to an annuity, then our physical land would be between 14-19% of total NW. We have a fairly large empty lot that is quite difficult to value, so that accounts for the wide spread. And no mortgage debt.

 

[Big_Hitter]

I don't count RE as part of my net worth. I have a rental that generates a cash flow that's used to offset monthly expenses. I have a mortgage on my primary residence and I don't count either in my NW calculation as the mortgage is covered by a pension. I tend to focus on my liquid NW in FIRE.

 

[Lawrencewendall]

Posted this in another thread (https://www.early-retirement.org/forums/f44/reit-allocation-108077.html):

Just did the math and I have 16.17% of my portfolio in REITs in 11 funds. That includes Agency Backed REIT, Mortgage REITs, Prison REIT, Data Center REIT, Triple Net Lease REIT and Telecommunication REIT. Average forward returns is 8.25%. There are over 100 different sectors of REITs. REIT is just a business model. I like that they HAVE to pay ME 90% of their profits. I'll be long with them.

 

[Big_Hitter]

Tough to value since I also have a COLA protected (and pretty much guaranteed for my life) that can be tough to value.

an easy way to estimate the value would be to multiply the annual annuity by your life expectancy, figuring any interest discount would be offset by the COLA

to give yourself a range of values, you could rap out the uncolad payments to your LE and discount those at 2% or something

 

[rodi]

Our RE is made up of primary home and a granny flat on the same lot. Granny flat is rented for income since Granny (MIL) moved to a care facility. The combo of primary and granny flat (all one parcel - must be sold together) is about 40% of our total net worth... But this is a hyper inflated real estate market (coastal southern cal.) If the same real estate were 30 miles further inland, it would be about 28% of our total net worth.

But - I don't use net worth for anything other than exercises like this. My house is my home... Paid off and low expenses. I suspect I'll always have a paid off primary home. But it might be a condo in the future as we shift to a lower maintenance lifestyle once the young adult children are launched.

 

[brett]

11 percent of our NW tied up in our home.

 

[FIREd]

About 2/3 of NW held in real estate - spread between residential, commercial, and land. No mortgages.

 

[bbbamI]

On my spreadsheet, I have two categories...total funds and total NW (including our mortgage free home in NW) so the percentage regarding real estate is 15%.

The above does not include two SS checks and pension.

 

[fire53]

~50% of our NW in SFH rentals not including our primary home.

 

[6miths]

Primary residence and cottage (do not rent it out) make up maybe 20% of net worth. They are probably about equal in value. No REITs.

 

[catii]

We live in Hawaii & since both our home & our rental properties are paid off, by definition, we're real estate heavy:


Home $1,426,000 34.2%

Rentals $1,309,000 31.4%

Cash, savings, etc. $1,434,000 34.4%


We don't plan to move, so our home value isn't considered for retirement income. Our rentals bring in $4,210 monthly, but are getting more difficult for us to manage, so we'll probably sell them in the next 5 years. But, since they bring in 53.1% of our retirement income, we'll look hard at where to put those sale funds.

 

[RobLJ]

For 10 years, I've had about 1-2% of assets in FRESX (Fidelity Real Estate) and 2-4% in FRIFX (Fidelity Real Estate Income). The % has gone down as the portfolio has grown; I've had a "goal" to reallocate some funds to increase back up to 6% but haven't got around to it.
For those concerned about bond funds and interest rate increases (I've seen several recent threads), FRIFX has generally paid about 4-5% a year in distributions, although quarterly and unevenly. I've mulled over moving some money from bond funds both for this reason and to decrease correlation. FRESX is a purer play on real estate.

Our house is about 18% of net worth.

Posted this in another thread (https://www.early-retirement.org/forums/f44/reit-allocation-108077.html):

Just did the math and I have 16.17% of my portfolio in REITs in 11 funds. That includes Agency Backed REIT, Mortgage REITs, Prison REIT, Data Center REIT, Triple Net Lease REIT and Telecommunication REIT. Average forward returns is 8.25%. There are over 100 different sectors of REITs. REIT is just a business model. I like that they HAVE to pay ME 90% of their profits. I'll be long with them.