What % of your portfolio is in direct RE?

Interesting article recently, with a quote by NERA Economic and Consulting Mercer associate director Hird, who believes that investors aiming for a 15 per cent annual return with minimal risk should have at least 60% of their portfolio in residential real estate.

Hird's opinion is that real estate’s lower volatility makes it the perfect companion to diversify an investor’s share holdings, as shown by the property sector’s strength during the 1987 stock market crash and the more recent 2001 technology stock correction.

But is this type of thinking sustainable in the current market and for the next 20 years? Hird thinks YES, as evidenced by this quote:


“We see the major factors that drove those returns over the last 20 years as being the same, if not stronger, over the next 20 years,” he said.

The report identifies those factors as:

the relatively fixed supply of real estate offering the amenities people tend to value (eg. urban housing close to employment, transport etc.);
population growth;
falling household size;
growing household incomes; and
the availability of housing finance.
Hird said these factors had driven house price increases to the point where prices as a multiple of average weekly earnings were higher than historic averages. While some analysts view this as unsustainable, Hird is not among them.

What do others think?
Is 60% or more of your portfolio tied up in real estate?

 

Hi Jacquue.

51.72413%!

 

Hahaha! Alan, you do know how to bring a smile to my face after a long day! I can see you diligently working on that calculator now......

 

64.5% for us (not includ super, just direct property & shares)

 

RE 90%, shares 10% (super not included)

 

0%.......................

 

We are on 98.7% in R.E. not including super.

A bit outa wack with most by the look of it but so far it is working well.

 

RE 76% not including super for us

 

66% RE (including PPOR)

 

RE 72.33% of total portfolio, including PPOR.

 

% Portfolio

In terms of EQUITY..

Cash/Other 22%
Shares 23%
Property 53%

In terms of total $ controlled ...

Cash/Other 4%
Shares 6%
Property 90%

 

Currently holding 66% property and 33% shares (not including PPOR or super).

Like Sim I'm developing cashflow from my structure while property is slow with a veiw to buying more RE soon.

Basically I'm drawing down RE equity and putting it into shares rather than new property. I also sold a property last year which put more cash into shares.

Property leveraged to 80%
Shares leveraged to 50%

MJK

 

As per Tom&Don, this gets a bit confusing when you consider controlled vs equity. In terms of controlled (excluding PPOR):

RE:70%
Shares & Managed funds: 25%
Cash: 5%

But then there's the loan against the PPOR used in managed funds, and the cash float for shares sitting in a mortgage offset account for property, then there's foreign exchange rates ... too hard!

Unlike Tom&Don I haven't worked out the equity!

Dave

 

currently around 85% in property and after my entry into managed funds i wish it was higher!

steve

 

85% excluding ppor and super

 

percentages

67.5percent property, 32.5percent managed funds + super. No PPOR.


Bob

 

54% property (includes PPOR)
7% direct shares
32% Managed funds
5% Super (self Managed)
2% Cash

LVR of 26% (drawn)
Plus
LVR of 23% (Available but not drawn)

Cheers