Quote Originally Posted by Harvey Specter View Post
Why are you allocating your debt against propety? Just because thats what it is secured over?

Consider it different way.

My guess is you are probably overweight in Property yet your returns on an EBITDA basis are probably alot lower.

You have property worth $X, and shares worth $Y. Deduct from that portfolio debt of $Z (which just happens to be secured over property to give you a low interest rate).

You could argue the counterfactual that without the property, you wouldn't be able to get debt, which is a far comment. Always compare like for like, while being mindful of the benefits of each.
Absolutely fair comment and well worth me including in my tracking.

So even if I subtract my current WACC (5.21%), the returns are still good 10% to 15% with the 10% being my NZ portfolio (which has a LVR of 35%). And yes, I am well overweight in property, running an overall share portfolio of between 5 and 10% of the property (excluding our Kiwisaver untouchable). The problem for me is, I have no "professional" financial/investment training (but have been investing for more than 20 yrs) and am working totally solo due to location and situation. The time I need to put into the shares is very very high as I need to ensure that my overall return is better than the mortgage rate (I don't include capital gains for properties). The shares give me international reach and better liquidity. When the portfolio gets larger I sell and reduce debt. So far the process has been working and I don't feel confident enough to put more money into shares - someone can live in a house when everything goes wrong but when a share goes "belly-up" it merely goes to a $0 value (Aero Inventory case in-point as one of my early zeros due to accounting fraud!).