A Peek Inside My 7 Figure Real Estate Portfolio: 2018 Q1/Q2 Update
Updated: Oct 25, 2020
A profitable exit on a risky investment (finally!), a dump of (awful) Lending Club loans, and a new long-term hold to avoid taxes indefinitely (with "defer, defer and die").
Note: this is an older version of this article series and there is another, newer update now available. Click here to view the master index which contains a link to the latest and greatest update (as well as all of the older updates). (Usual disclaimer: I'm just an investor expressing my personal opinion and not a registered financial advisor, attorney or accountant. Consult your own financial professionals before making any financial decisions. Code of Ethics: We do not accept any money from any sponsor or platform for anything, including postings, reviews, referring investors, affiliate leads or advertising. Nor do we negotiate special terms for ourselves in the club above what we negotiate for the benefit of members.). This is a continuing series, where I lift the veil on my real estate portfolio (and the little bit I have left in alternative finance). First I'll give a quick summary of my risk profile and preferences. Then I'll talk about what's changed since 2017, and finally the details of each individual investment.
First, I rely on my investments for income, so I'm an extremely conservative investor. Preservation of capital is the most important for me, so what I do may not be appropriate for someone looking to be more aggressive or speculative. At this stage of the cycle, I'm thinking defensively about the upcoming downturn, and all investments have to leave me feeling okay after I pound them with recession-level stress tests. (Here's a Guide to My Conservative Due-Diligence Process talking about how I do all of the above).
Second, I like investments that are quick and slow. Quick, meaning hard money loan funds with short lockups that are one year or less. And slow meaning long-term equity investments (7+ years) that I can ride well past the next downturn. And I hold cash to hopefully take advantage of distressed situations when the downturn comes. I avoid the 2 to 5 year value-added, high leverage investments that are 95% of the offerings on crowd funding platforms. (see "My Real Estate Investment Strategy: Part 1").
My wife and I have seven figures invested in "alternative finance". This is almost all in real estate but a little in peer to peer (and being reduced). We had an 9.3% annualized return this half-year, which was better than the 8.1% annualized return of 2017 Q3/Q4. This was from the out-performance of the residential rental homes (9.2% versus 7%), and also the exiting of an opportunistic real estate development syndication (which yielded 160%, but was the only a very small part of the p