How do real estate holding play in the PP

[ppnewbie]

Question: I have a decent sized real estate portfolio with a recent new opportunity coming up. Is there anyway to integrate this into the portfolio. Like say maybe treat them as long term bonds because the real estate is cash flow real estate. It’s not liquid but would also have long term treasuries in the portfolio as well to use for the rebalancing required.

Or is this basically the variable portfolio part?

[pmward]

Question: I have a decent sized real estate portfolio with a recent new opportunity coming up. Is there anyway to integrate this into the portfolio. Like say maybe treat them as long term bonds because the real estate is cash flow real estate. It’s not liquid but would also have long term treasuries in the portfolio as well to use for the rebalancing required.

Or is this basically the variable portfolio part?

I would probably keep it in the variable portfolio if anything, especially since I'm assuming it's going to be a levered investment. I will also be purchasing a piece of investment real estate later this year, personally I'm considering it a business venture and not considering it a part of my portfolio, just as a part of my net worth.

You could count it as part of your hard asset weighting though and reduce your gold weighting a bit if you so desired since real estate is also an inflation hedge. It's pretty difficult to include real estate in the PP though because it's not liquid enough for rebalancing.

[ppnewbie]

Perfect thanks for the reply. That's kind of what I was thinking. Although my investments are not levered at all and cash flow about 8 to 10 percent a year.

[mathjak107]

owning real estate is akin to owning a business ..it plays no part in our portfolio's ..in fact our portfolio is the place we put the money we make from our real estate .. we have been liquidating all our real estate the past decade ... we don't want to be landlords in retirement and we want only trouble free liquid investments .. so far we have just two manhattan co-ops by central park left ..we have those for sale to investors for 30 cents on the dollar since they have rent stabilized tenants in them .

real estate is it's own class .. it is not a good inflation hedge at all when rates get high enough from inflation , real estate sucks ...few are buying real estate when mortgages hit double digits . real estate is to localized to be consistent across the board .. it is also highly wife dependent .. if the wife does not like the kitchen your property does not sell compared to the next persons .

so my advice is always treat it as a business , not your investing ... a business is you working for your money , our portfolio's are our money working for us

[ppnewbie]

owning real estate is akin to owning a business ..it plays no part in our portfolio's ..in fact our portfolio is the place we put the money we make from our real estate .. we have been liquidating all our real estate the past decade ... we don't want to be landlords in retirement and we want only trouble free liquid investments .. so far we have just two manhattan co-ops by central park left ..we have those for sale to investors for 30 cents on the dollar since they have rent stabilized tenants in them .

real estate is it's own class .. it is not a good inflation hedge at all when rates get high enough from inflation , real estate sucks ...few are buying real estate when mortgages hit double digits . real estate is to localized to be consistent across the board .. it is also highly wife dependent .. if the wife does not like the kitchen your property does not sell compared to the next persons .

so my advice is always treat it as a business , not your investing ... a business is you working for your money , our portfolio's are our money working for us

Thanks! Very helpful.

[boglerdude]

> sale to investors for 30 cents on the dollar since they have rent stabilized tenants

You could sell a NY condo for 1 million if empty, but only 300k with tenants? No way to get them out?

[mathjak107]

no , there is no way to get them out ...but we knew that going in .. we got 9 co-ops in a prestigious building over looking central park for pennies on the dollar ... we bought out 7 of the 9 leases for 100k after we obtained the package and made incredible money selling 7 ... we can give these two away free and it would not effect us ....

one apartment is at a positive rent and one at a loss so they are break even ... the problem is the one at a loss has a 26 year old with succession rights ... so it can be a long wait ... but at the worst our kids will get them eventually .

in the mean time we have them offered to the tenants for 50 cents on the dollar , no money down and we will finance for 7 years ... so we will see .. our broker has them and is offering them to investors . 675k takes both apartments worth over 1 million each so basically the investor is buying the positive flow one for about 1/2 price and getting the 2nd for free ..... these are in the 200 central park south building which is very famous .

[alexhales123]

I could in all likelihood maintain it inside the variable portfolio if something, especially due to the fact I'm assuming it'll be a levered investment. I will also be shopping a chunk of investment K & T BARNES BUILDERS and real estate later this year, for my part I'm considering it a business assignment and no longer considering it part of my portfolio, just as part of my internet worth.

You should be counted it as part of your hard asset weighting although and reduce your gold weighting a bit in case you so preferred seeing that real estate is likewise an inflation hedge. It's pretty difficult to include real property within the PP though as it's no longer liquid enough for rebalancing.

[sophie]

Question: I have a decent sized real estate portfolio with a recent new opportunity coming up. Is there anyway to integrate this into the portfolio. Like say maybe treat them as long term bonds because the real estate is cash flow real estate. It’s not liquid but would also have long term treasuries in the portfolio as well to use for the rebalancing required.

I have a much simpler answer for you: Real estate has no place in the PP. Furthermore, any investment that isn't a collection of stocks, long Treasury bonds, cash, or gold (the metal, not mining stocks and not silver) gets the same answer.

Of course you should invest your money as you see fit. If you integrate the real estate holdings into your portfolio, then you still have a portfolio but it's no longer a PP. Nothing wrong with holding the real estate as a separate portfolio though. I wouldn't necessarily label it as a "variable portfolio" since that implies you're trying to gamble for better returns than the market average.

[Smith1776]

I remember Browne being quite funny about real estate holdings in terms of their relationship to investment.

"When real estate prices go up you can't just sell off your front porch to rebalance your portfolio." or something to that effect.

[Xan]

I'm 90+% sure that "alexhales123" is a spambot. It's the first post for that user, it resurrected an old thread, said a lot without saying very much, and included a link. Initially the name of the building company he mentioned was a link, apparently to the real building company. It could be an SEO thing. I removed the link. The rest of the post is amazingly clever, almost like it was lifting phrases from elsewhere in this forum. The only clanger is "internet worth" instead of "net worth", which is plain weird.

Maybe it's a real person. alexhales123, please let me know if you are!

[Smith1776]

We've been bamboozled!!!

[sophie]

Dang I didn't notice the date on the first post. Usually I get alerted by seeing posts from people from bygone eras.

It is a not a terrible question to resurrect though.