Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Seth M. Jones

Seth M. Jones has started 5 posts and replied 76 times.

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

@Kevin McGuire, you have a very clear picture of how each asset class fits into your portfolio, and I really appreciate you sharing your perspective, it is tremendously helpful. Also, thank you for sharing how you've allocated your porfolio. Regarding the REIT's I agree with you, though I feel my market has a bit more risk exposure, which is how I justify the REITs in the portfolio. I'm in a coastal Florida city with annual hurricane/flooding exposure. While I love my market, I see a REIT as an alternative to trying to invest out of market and add some diversification to my RE portfolio (yes I know there aren't the tax advantages or sweat equity advantages). Perhaps when I have more time on my I'll focus a bit more on out of market investing.

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43
Originally posted by @Kyle Wells:
Originally posted by @Seth M. Jones:

There are many schools of thought out there regarding asset allocation... There are hardcore Real Estate Investors that will only invest in Real Estate and hold cash reserves, and there is a substantial part of the FI (Financial Independence) community that advocates for Index Fund investing (a la J.L Collins' "Simple Path to Wealth"). Leaving alone the whole stocks vs. bonds discussion, I'm really curious what are some "seasoned" investors thoughts on holistic asset allocation?

Currently, my portfolio (net worth) is 85% Real Estate Equity, 10% Cash, 5% Stocks/Bonds. This is primarily due to a focus on aggressively growing my real estate portfolio in my 20's. Now into my 30's I feel compelled to rebalance a bit, though I'm really interested to hear what others have to say about asset allocation?

I think it really comes down to preference. A low cost, S&P 500 index fund will return ~9-10% pre-tax per year over the long run with no management or effort required from you. Can you beat that in real estate? I think you can, but it requires more time and effort. I think a 50/50 balance is about right. In your 30s, I don't think you need to worry much about fixed income investments, I would start shifting some that way in your 50s and 60s once that wealth is to a comfortable place. The stock market has never gone down over an extended period of time (typically 10+ years), so you have plenty of years ahead to make any losses and then some. Ideally, you would shift some stock investments to dividend funds and live off the dividends and rental property cash flow at some point. 

I agree with you... unless fixed income for early retirement is the goal, which it is in my case. 

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

"So my W2 money is my live today money, my real estate is my retire young money and my stock investments are my get old money. I am not going to claim I have the right answer. Plenty of people are more successful than me and doing it differently."

@Joe Splitrock, thank you for for your insights! I love the quote above, and this is a way of looking at it that is really simple but for some reason just hadn't occurred to me. 

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

@Trevor Ewen, Thank you for answering my original question, very much appreciated. You're approach to building wealth makes a lot of sense to me, and I feel that you're going to get outstanding returns while also not being overexposed in any particular asset class. While I know BP is a RE investing community, I am noticing that some on this thread don't fully appreciate the upside of equities

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

@Mike Dymski, interesting perspective regarding diversification, and I assume you mean among different asset classes rather than within the asset class you best understand... Though I feel like Real Estate and FI investors for the most part are one in the same, the terms are just generally associated with Real Estate or Index Funds. Would you agree?

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

Thank you @Michael Ealy, I'll check this out.

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43
Originally posted by @Michael Ealy:
Originally posted by @Seth M. Jones:

@Michael Ealy, wow, can't argue with those results. Do you mind me asking, do you have a rule for how much cash reserves you keep?

I don't have one number for cash reserves as it varies per project.

Some of my projects are repositioning projects so the cash reserves there will be more.

Some are stabilized assets so the cash reserves will be less. 

I guess what I meant is in regards to your personal financial position... As your net worth grows, do you cash reserves grow as well? Do you have a specific percentage held in cash, or do you have a multiple of your annual operating/living expenses?

Post: Closing costs are 14K on a 120K house?? Am I being cheated?

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

This is all completely normal... the only things that are really true lender fees are the origination fee and underwriting fee. These fees are junk fees, but lenders often use both of those fees to increase profit a bit in order to offer you a better rate... I'd challenge the lender on both of those to individual fees, and get another quote. That being said, everything else is completely normal.

Post: Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

@Michael Ealy, wow, can't argue with those results. Do you mind me asking, do you have a rule for how much cash reserves you keep?

Post: Typical lending rates

Seth M. JonesPosted
  • Rental Property Investor
  • Port Orange, FL
  • Posts 78
  • Votes 43

I just want to chime in because I broker a lot deals with investors, and you can do better... but it is important to note that is consistent with where the market is right now for many investors and your relationship and experience with the lender is important as well... might not be worth burning a bridge or hard feelings over a quarter percent... just my thoughts.

I'd also pay attention to the posts by Jay H. as well, as he makes great points. It's not all about the rate... sometime it is actually more about what the loan costs. Big difference between in rate if you have $0 lender fees or $5000 in lender fees