105: How to Think About Asset Allocation

Asset allocation is a topic that is under-discussed in property, especially in terms of portfolio-building. 

You see, while it’s a common term in traditional asset classes, it’s also an important concept to consider when talking about real estate…

And basically, if you’ve ever created a plan or strategy to build your portfolio, you’ve already thought about how and where to allocate available assets.

Today, we talk about asset allocation and take an interesting angle on thinking about capital allocation ratios and building your portfolio through a principles-based perspective.

We also talk about why deal flow is not the problem…
How the time horizon affects your property strategy…
Why you should always go back to a “first principles” way of thinking…
And so much more!

See you on the inside!

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In this episode, we cover:

  1. What do we mean by asset allocation? [06:12]
  2. 3 key components to a property’s success [07:49]
  3. Deal flow is not the problem! [09:20]
  4. Why 93% of investors never get past two properties, 74% past one [12:03]
  5. How to decide asset allocation in terms of your portfolio [13:37]
    • Capital-to-debt ratio [15:34]
      • Resources & tying in The Holy Trinity [21:42]
      • Availability of assets in the marketplace [25:23]
    • Borrowing capacity & allocating it to one or more properties [29:19]
    • How the time horizon affects your property strategy [33:39]
  6. How emotional and financial fortitude affect asset allocation [37:46]
  7. A deeper look at time horizons [44:46]
    • Always go back to “first principles” thinking [49:46]
  8. Supporting analogies [54:28]

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