$1m portfolio with 30% in real estate

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  • Avatar Infinity 
    Status: Physician
    Posts: 91
    Joined: 05/25/2019

    I don’t see investing in crowd funding the same as directly own real estates.

    It lacks of many benefits of owning real estates, including:

    -Depreciation (how nice to defer taxes of some incomes until you sell the properties, like 401K)

    -Appreciation (like stocks even though not as fast)

    -Leverage (you can leverage as much as you like or as much as your bank allows; you can take cash out refinance when the equity is high)

    -Long term stability (almost as good as bonds)

    Adding the fact that we don’t know how good is CF regulated, I would agree with Tim, 30% in CF is high.

    #244805 Reply
    Avatar scutum 
    Status: Physician
    Posts: 3
    Joined: 09/08/2019

    I’ve never really set a goal AA. I’m early on in my career so I am putting money into paying off my house rather than into bonds and the rest are index funds and target date funds (which I know include some bonds).

    I keep reading 5 to 10% for real estate and that’s why I was getting nervous. I keep telling myself that I don’t want to dump a bunch more into the markets given the levels they’re at/volatility etc. Obviously, I know we can’t time the markets but I feel more sure of these crowdfunding deals than I do the markets, which probably has no basis.

    #244820 Reply
    Avatar Tim 
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    There is a huge difference between paying off your house and CF investing. From a portfolio AA perspective, the House and mortgage isn’t part of the calculation.
    AA is the most important choice you make.
    CF is simply the platform, it sounds like you are simply using it to invest in debt instruments. Debt secured by real estate is still debt. You can use broad etf’s debt or narrow etf’s for tilt. The same for assets, etf’s broad or narrow sectors.
    Why is the CF platform better than NASDAQ or NYSE?
    No approach is “correct”. I suggest you need to have a plan for AA and how you wish to scale your investments up in the future. The emotions need to be translated into an AA that fits your risk capacity/tolerance.
    Then the technique and platform.

    Now the good news, you hit $1mm, you will have a plan to follow with the next $1mm. The success of the underlying investment (ownership or debt) is the driver of the profit is the key. Make your plan scalable since it looks like you are going to hit the next milestone sooner than you think. Payoff your mortgage, then what?
    It will be worth your time thinking things through.
    Congratulations. The best plan is one you are comfortable with.

    How To Write an Investment Policy Statement

    #244843 Reply
    Avatar scutum 
    Status: Physician
    Posts: 3
    Joined: 09/08/2019

    CONGRATS on passing the $1M net worth mark! Big deal, especially only 5 years out of training. Did you have student loans?


    We had about $220k coming out of fellowship. We hit it hard instead of letting it fester.

    Thanks all for the encouragement and advice. I think I’ll pump the brakes on CF for a while and let the rest grow.

    I do see a misconception on realizing depreciation tax benefits with CF. All of my equity deals have provided K-1 docs and some degree of depreciation thus far.

    #244848 Reply
    Liked by SLC OB

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