How much of your portfolio is in property?

[lowb]

Searched for posts but couldn't find any

Lets say...

[total of all property values] / [total of all assets]

1. Roughly how much of your portfolio is in property?

2. Why do you choose say, 100%? 80%? 60%?
(why not 100%?)
(decreased to help with DSR?)
(decreased for liquidity?)
(in essence, what does this depend upon and how did you make your decision regarding this)

3. In what form are your other assets?

4. Any other comments, please.

Ta!

Related posts

Do you use property to generate equity or income
http://www.somersoft.com/forums/showthread.php?t=22811&highlight=poll

What is your net work
http://www.somersoft.com/forums/showthread.php?t=22808&highlight=poll

 

[lowb]

1. ~90%
2. 10% for buffer, but will go to 100% until i hit DSR 50%, then will aim for 90% for buffer
-also inexperienced with shares!
3. 10% in cash
4. i will change my strategy as i gain experience

 

[alexlee]

Gross assets or net assets? With the amount of gearing that you can get with IPs, it's usually a pretty high % of gross but might be lower % of net.

 

[Sultan of Swing]

lowb

You've been a member for about a month and made 200 posts already, an average of over 6 a day. In case I've missed it, could you tell us what assets you have and what your investment history is?

There haven't been so many polls on Somersoft over the past 2 years as you've started the past month. What are you doing with all the information? Can you explain what the point of all the polls is? I'm starting to think you have a hidden agenda.

 

[willair]

lowb,for us the spread would be about 80% property the other 20% is
Australian blue chip equities,fixed interest, and a cash buffer ready
just in case something pops up.But i know several who only hold
long term blue chip shares,and who only rent and want nothing to do
with property their reasoning is that they only know one asset class
and over the longer term they think some blue chips will remain the
same........good luck willair..........

 

[Mary]

There haven't been so many polls on Somersoft over the past 2 years as you've started the past month. What are you doing with all the information? Can you explain what the point of all the polls is? I'm starting to think you have a hidden agenda.

Don't be such a cynic, what about that member named "qaz" who posted a poll every 2nd day? He was young and enthusiastic and wanted to learn. I think lowb is similar.

The thing with forums is that every now and again you get people who discover this great resource and go through a phase of making a lot of posts / polls in a short period of time. In fact i think Sim disabled the poll option in the coffee lounge because of the zealousness of some new members.

 

[alexlee]

This is a property forum, with most of us being property investors. Given the amount of leverage you can have with property, I would be very surprised if anyone had less than 70% of their portfolio (gross or net) in property.

lowb, what sort of result are you expecting? Besides, % isn't very meaningful. I could have one property or a hundred, and you can't tell based on the poll.

I would imagine more interesting info would be: does % of assets in property decrease as one's portfolio go up? Do bigger investors diversify into other asset classes or stick to what they know?
Alex

 

[lowb]

hi,

///
my background:

saved up deposit and purchased IP #1 in 2005dec, read ~3 books on real estate (mcknight, mcgrath, and the other one i forgot). i thought i knew a lot! but with the first purchase made many mistakes -actually, every mistake in every category!

-used residex report on units
-didnt look up any demographic trends
-didnt look up council developments
-didnt think about legal (should have used hybrid trust) or financial structure (should have used IO/Offset/Credit Card)
-overpaid!! for the unit (the real estate agent kept saying that the 'vendor was keen to sell but the price wasnt right (what crap!)' but! at the time I was so green I just increased my offer (maybe by around 10k)
-location isn't very good (not that bad though) as it is in a 'potential flood area'
-underestimated rennovations! in fact, the entire property basically needed things to be done (paint, carpet, kitchen, bathroom, laundry). i did it myself (which was hard work) but even then the profit margin was now negligible
-as a fhog, i furnished the place with furniture (cost so much, fridge, washing machine, etc.), which i regret! i moved out and will now rent it out furnished (doesnt increase the rent by much)
-i was just too inexperiences and lacked knowledge.

///

-this forum has been a lifesaver -cannot express my gratitude to all the forum members as i have been reading as much as i can here everyday, buying the books/magazines, using the spreadsheets, looking up ato, council, abs, financial reports, etc.
-i think as a beginner we have more questions than answers and for that i apologise for all the posts with questions! i hope that as i learn more i can contribute; the potential information in property is limitless though, it starts off with market prices, then demographics, then social trends, economics, world events, etc..
-now refinancing... am able to buy 2nd ip in the sydney market, reading very heavily, collating as much data (abo, census, council) and integrating it and working out year changes, extrapolating
-will spend weekends talking to pm's, driving around different areas, trying to understand definite social/economic changes that will occur to try and buy better this time
-am confident that i will not repeat my mistakes

///

-i think the next step from not making basic mistakes is to optimise investment strategy and structure.. (i suppose this is the next level in property investing?)
(by using excel, working out rough figures)
-this is because you will end up with more number of dollars if you tweak how you do things

///

-im thinking big even though i am not at the moment, but for the case of very very large portfolio's
-in view of the emphasis of +CG property investing style which has higher potential gains than +CF property investing style (correct?), i am not sure if it is possible to have an enormous portfolio 100% in property because servicibility would be limited
-in that case, i ask myself how much assets should you divert away from portfolio to service your property
-and... here is the optimise question (which is the hard question?), what is the the best % range to put assets for CF purposes

///

-sorry for such a long post, and as mary has noticed, i am just a noob who is learning too much (so too many questions i have!)
-thank you for your concern, as i have realised that i have spent too much time here and have neglected many other things i need to do (for one thing, i have 2 assignments i havent even started..)
-look forward to learning from you all, and this forum is the bomb for property

 

[alexlee]

Don't know about you but I use my salary to service shortfalls in CF.

I think you're analysing this too much, lowb, and your problem is that you're asking questions successful investors do not ask. I'm just starting, but I've never thought 'I'll stick to x% LVR or I'll divert 20% of my portfolio to shares'. I just keep seeing properties and shares I believe will give good growth in the future and keep buying. I look at the asset mix only from a cashflow point of view (i.e. can I afford the investment?)

Personally, I've never really thought about my asset split in terms of %. It's meaningless, anyway. Say you have 20% in shares. What sort of shares? LPTs (high income, lower CG), banks (good income, good CG) or penny mining shares (no income, potentially high or zero CG)? Even if the most successful members give you every detail of their portfolios, it will be the result of years of build-up and you won't be able to replicate it. Most of us just keep buying good investments that fit our criteria. It's not a matter of 'gee, my share % looks a bit low, let's buy some more shares'.

There IS no optimal portfolio. I think you're trying to look for an investment plan that will make you successful without making mistakes, but there is no such thing. The most successful investors are those who have made the most mistakes. In short, go out there and look at properties, make offers, and talk to agents. Make mistakes, learn from them. Getting to the next level of investing, as you call it, is a gradual process. It's not something you arrive at by sitting in a room. It's from talking to people, walking the walk, so to speak, and gradually improving by doing.

Re data.... I've personally never looked at suburb demographics (though I look at city demographics) or council info. Even a IP in the crappiest suburb can be a good buy at the right price. You'll never find a perfect IP. Keep looking for it and you end up buying nothing.

I recently hit a milestone in debt recently. If I had no debt and asked for that amount from the bank, they would laugh at me because I wouldn't be able to service it. However, I HAVE managed to build up this amount of debt gradually, and my serviceability has increased via rent increases. There's no point having 1 IP and wondering how you're going to service 10. Concentrate on buying your second IP, third IP, etc, and by the time you HAVE 10 your question is irrelevant. Think big, yes, but remember a big portfolio is still made up of lots of individual properties. Thinking big but being too concerned about making mistakes to buy your next property and you'll never get there.
Alex

 

[skater]

Lowb, you have all this information available to you through this fantastic forum, but the truth of it is (as Alex said), many investors don't look at a lot of this information. Don't make the mistake of over analysing & not buying.

We don't have any other assets, only property. I know we should look at diversifying, but since I don't understand the sharemarket it hasn't been a priority. I have made money from realestate & as the saying goes "When your on a good thing, stick to it", so that's what I am doing.

 

[Sultan of Swing]

Good, candid post lowb! For me, it's easier to answer your questions when I know where you're coming from (if that makes sense). Not that I know to many answers to your questions myself.

We've all made mistakes, that you can be sure of.

At least you've made a start.

Out of curiosity, how old are you?

As an aside, I'm just reading a book and at the start of the chapter I'm reading are three quotes that are sort of appropriate.

He who would climb a ladder must begin at the bottom. - Old English proverb.

He who wishes to be rich in a day will be hanged in a year. - Leonardo de Vinci

The only place where success comes before work is in the dictionary. - Vidal Sassoon

And then a further comment - As the Master Investor's experience increases, so do his returns... he now seems to spend less time to make more money. He has 'paid his dues'.

Cheers

 

[The Y-man]

Searched for posts but couldn't find any

Lets say...

[total of all property values] / [total of all assets]

Lowb,

Inclusive of super or not?

Cheers,

The Y-man

 

[Aceyducey]

Excluding Super (which I don't count as an investment)....

Around the 30% mark.

It's also my least performing asset class atm.

Cheers,

Aceyducey

 

[The Y-man]

Lowb,

I posted this some time ago
http://www.somersoft.com/forums/showthread.php?t=23692

I guess I can update now....

Net figures (our equity)

Income type funds (inc. Commercial Property Trusts): 21.6%
Direct Residential Property: 45.8%
Direct Shares: -0.2%
Growth type funds: 9.6%
Cash/Gold: 4.8%
Super: 18.4%


Gross figures

Income type funds (inc. Commercial Property Trusts): 12%
Direct Residential Property: 53%
Direct Shares: 18%
Growth type funds: 12%
Cash/Gold: 1%
Super: 4%

Hope this gives you some ideas

Cheers,

The Y-man

 

[topcropper]

About 70% in property. A grain farm.
20% in shares and managed funds.
Unfortunately I would have the remaining 10% of my assets as depreciating machinery to run the farm, plus a reasonable amount of debt over each asset class.

See ya's.

 

[Twitch]

95% property, 5% in super.

It's split like that because I'm still in the early phase of growing my asset base.

 

[alexlee]

I'd like to know who voted 0 - 10%.

 

[MichaelW]

Gross figures:

PPOR 35%
IPs 36%
Shares 25%
Cash 4%

So, I put property as 70-80% as I include my PPOR as a property asset.

Cheers,
Michael.

 

[MarkB]

I just wanted to echo Skater's comments where she (essentially) said:

- beware of analysis paralysis, and

- there is nothing wrong with sticking to what you know (and are good at).


Alot of people (especially FAs who have an interest in saying it) will tell you that you need to diversify because markets have cycles and it is the prudent thing to do.

The truth is that the need to diversify is greatest amongst those who have no active wealth creation strategy (ie. people who are at the stage in life where they want to spend the money, not worrying about making it).

Persons who are still in the wealth building phase (many of us?) have the luxury, if they so choose, to be able to afford to put all of our eggs into one basket.

A NZ FA by the name of Martin Hawes recently published a book called "Twenty Good Summers" in which he made this very point. He encourages people who are in the process of building assets to stick to one asset class and to diversify as they reach the end of their wealth accumulation phase.

M

 

[MichaelW]

Persons who are still in the wealth building phase (many of us?) have the luxury, if they so choose, to be able to afford to put all of our eggs into one basket.

Mark,

I disagree, politely of course. Diversification isn't only a risk mitigation strategy, it is a wealth acceleration strategy if applied correctly. I don't diversify for risk mitigation purposes, I diversify so that I get the optimal mix of income versus growth assets. I can't get the income I need out of my property investments so by necessity have to look elsewhere to supplement my income so that I've got the cash flow to continue to procure growth property assets.

My interest bill alone now tops $100K pa, so without diversification I would have hit my servicability limit by now.

Just another point of view. Though I agree in principal that diversification just for the sake of it is not a prudent investment decision, I do feel that informed diversification to support a specific investment strategy can be a good idea.

Cheers,
Michael.