ghh101
Dryer sheet wannabe
- Joined
- Aug 2, 2017
- Messages
- 20
Yes I follow his blog. I was looking at starting a blog myself pertaining to my situation and FIRE.
Yes I follow his blog. I was looking at starting a blog myself pertaining to my situation and FIRE.
Rental real estate on the OP's scale is a business. not an asset class. All businesses have business risks. I would not want to be in any small, retail customer-oriented business in Detroit or Flint. The demographics are not in my favor.
Most real estate investors are astute enough to see a trend of deterioration in a market before the press does. They can sell or exchange out of the next Detroit before it's too late.
The paper asset markets have only been around for maybe 150 years. Individuals have only participated in any numbers for the last 50 years or so. Not a really long track record. As an individual investor, I can't control what the companies issuing the stocks and bonds do, so the answer is to diversify away the risk of company bad behavior or failure. My results are average and subject to market whims. Finally, we may be overestimating future economic growth and future returns because we may be past the growth spurt. We could be taking on too much risk for the actual return.
I would be very nervous having 100 percent of my net worth in and most of my income from paper asset classes. Skill as a paper asset investor is hard to come by and obtaining out-sized returns nearly impossible. That's not been a problem in the past, but might be in the future if returns decline. Skill applied to real estate investing has a much better chance of producing above average returns.
As a percentage of total net worth, I'm probably too concentrated in real estate at this point. That's because a combination of buying decent properties, not making too many really bad mistakes, leverage, and government incentives grew that portion of the net worth faster. Given the nosebleed territory of market multiples, I'm not inclined to "fix" the allocation today. I would rather take the guaranteed return of paying off mortgages.