Canadian investors see RE as a safer investment vehicle than stocks. -vreaa
This information from Vanlord at RE Talks starting 20 Dec 2009 4:09 pm -
“Stops have their place, but they aren’t going to guarantee you safety in the stock market, either way I don’t use them in most cases, and am personally comfortable to be 65% real estate 25% stock market 10% Cash. At current rates, I’m paying down significant principal so even when interest rates rise I will have a lot less debt owing than if rates remained “normal”, and when Interest rates rise, I will be allowed to increase my rents at much higher percentages each year, due to the higher inflation rate. If housing prices do drop off the cliff, I’ll be ready to scoop up cheap properties with my cash and stock equity, and am well positioned to ride out the hit against current RE equity, since they pay for themselves anyways.”
Vanlord later clarified that the ’65%’ was his own actual equity in RE, with mortgages still existent for over 50% of the total property value. Thus Vanlord’s Portfolio is 10% Cash, 25% Stocks, 130% RE (of which more than half is borrowed). His total portfolio leverage to movements in RE prices is >1.3 to 1.
“and when Interest rates rise, I will be allowed to increase my rents at much higher percentages each year, due to the higher inflation rate”
This is comical.