Portion of your NW in real estate

[Lawrencewendall]

Posted this in another thread (https://www.early-retirement.org/for...-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]

Quote:

Originally Posted by ExFlyBoy5 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.

Quote:

Originally Posted by Lawrencewendall Posted this in another thread (https://www.early-retirement.org/for...-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.

[wildsun]

22% Home
15% Vacation Rentals
04% REITs

41% Total Assets in Real Estate

[ArmchairMillionaire23]

Quote:

Originally Posted by twaddle I track personal residence separately from other real assets in my spreadsheet. For those who include real estate in their net worth, how do you value it? I update mine once a year at assessed value, which seems conservative.

We don't include our home when considering net worth. We paid 42K for it 11 years ago. We might get 75K (minus 6%) for it if we sold it today. It's value is less than 6% of our investment net worth so I don't consider it to have much value. If we sell it when we retire we'd most likely end up having to purchase a more expensive home to live in anyway. The proceeds from the sale would most likely just be used for the down payment for the next home.

[skyking1]

guesstimate of 25% in primary residence and beach lot. The current plan is to check out a different area to retire to, and purchase land and build a new home. That will skew the percentage up towards 40%.

[anothercog]

DW holds a REIT fund in her IRA, which is about 50% of her IRA but only 2.5% of of our investment portfolio. I don’t really count my residence in my NW unless I contemplate moving and then I’ll consider market value less selling costs and taxes.

If I sold today and moved someplace where $700k would get me a nice house with great public schools, I would hit my semi-fat RE target.

[imnontrad]

I only have my home but I was wondering if I should diversify my investment portfolio (home is 15% of NW). But I do not think I want to manage property so I am am thinking of a limited partnership of mobile home parks or else just REITs.

[Retired Expat]

All RE is considered in my NW because all are sellable and can convertible to cash, and at some point I may sell them off as part of my withdrawal strategy. But more importantly, they generate a substantial amount of income and are relatively secure investments. Mine return 5-6% a year in net rental income. If you add in appreciation, then 7 to 10% usually. This year prices have spiked so will see what happens.

We turned our 2nd home/vacation property into an AirBnB and rentals more than cover our carrying costs amd depending on rental versus personal use even turns a nice profit. This past year where we couldn’t travel to use it, it generated a 15% net rate of return! But really the idea is to rent it enough to not spend savings to hold it....

But I am a construction/property management professional and made a good portion of my fortune (meager though it is) in buying properties, fixing them up, renting them and ultimate selling as long term cap gains. I can easily see how this isn’t for many people, but if you can make it work it is a great source of stable income....

Finally, if you take advantage of 1031 exchanges you can postpone paying tax on property sold as you grow and improve your portfolio. Like an IRA where gains are not taxed until you ultimately withdraw the money.

Many say that property is the best way to wealth and for me, that has been 100% true

[Letj]

Quote:

Originally Posted by 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.

Selling off rentals is so much harder than we think. The tax hit is tremendous, especially if they’re highly appreciated and owned for a long time. I am truly shell shocked by how much taxes I have to pay. I am selling/have sold 11 appreciated properties and with recapture depreciation tax, 20% capital gains, 3.8% net investment tax and state tax, I am seriously contemplating whether I want to even get rid of any more houses. This market doesn’t present good opportunities for 1031 exchange with only 45 days to identify a replacement property. My other option would be a DST but then your money is tied up with low returns and you lose total control. It’s a real dilemma.

[Markola]

If I was interested in owning single family homes, I’d evaluate investing in this company, which claims to take a lot of the headache away for a cut: https://www.roofstock.com

[Fermion]

Those of you who don't count RE as part of your net worth will be quite in shock that the lawyer who sues you will definitely count it!

[folly]

We have our primary house which we built 4 years ago in a small resort town off the beaten path. It ended up costing us twice what we had budgeted for. So much for down-sizing. We will be here until one of us dies as I think it will take that long for the sales price to catch up with the building cost. We have three rentals, two are senior only housing. They are nice because ppl move in and stay until they die but on the other hand if I want to move in I would feel like crap telling a old person they had to move. Also I have heard stories from other owners that when they attempt to raise the rent some older tenants just ignore them and the battle for $50 increase is not worth the anxiety. Yet we made the mistake of not doing a yearly increase and three years later when we tried to up the rent the tenant call us names and moved out. Lesson learned. We also have REITS. One is a health care properties and the other is a reit that has computer servers real estate. Both have performed well and weathered the ups and downs of the market well. The stock market has done better than both real estate and the REITS. There is less and less trade ppl in the work force. Most have retired and the ones left are swamped with work. If you cannot maintain real estate yourself then I wouldn't be in it. Those youtubes come in handy when you have to fix something you know nothing about!