Do Not Consider Investing in Real Estate (Including Your Own Home) With More Than 20% of Your Assets
If you create a pie chart of all your investment assets and real estate is more than 20%, do not consider investing in more real estate. I understand that your home may, itself, be greater than 20% and I’m ok with that because it is much more than just an investment.
But if you also own an investment property and the combination puts you over 20%, your financial well-being is overwhelmingly controlled by the performance of real estate. To be successful at this, you need to be an expert in managing real estate.
Why You Don’t Want to Dabble in Investment Real Estate
What this tip boils down to for most of you reading this is to never own investment real estate. Because of the sheer size of the exposure you have to take, you can never diversify the risk and you will be left with the performance of that one or perhaps a few properties. It becomes your second job and I don’t think that’s what you really want.