How much of the average person’s financial portfolio should be in real estate?
A. That depends on your finances, but if you’re looking to purchase investment real estate, you have to run it like a business. Do you have the money to pay for the mortgage, expenses, and property taxes if somebody you lease to can’t pay? What if they’ve trashed your place and you need money to fix it? I don’t have a problem with buying real estate right now but only if you have the working capital to keep that business going. On the issue of percentage of real estate in a portfolio, I have friends who love real estate. One friend has done incredibly well. She has the majority of her investable assets in real estate, with more than enough liquid funds so that if tenants don’t pay, she can carry every property she owns for at least a year. That’s what she’s comfortable with. Q. What’s the biggest mistake real estate practitioners make in their own financial planning? A. They spend money as they make it and don’t think the income stream will ever end. Then they hit a hard patch and frea
