Asset Allocation in Real Estate

A Person looking investing dashboard via laptop

Asset Allocation in Real Estate

First things first, what is asset allocation? Asset allocation is a term used to describe a certain type of investment strategy and it focuses on putting different buckets of money into different assets to balance risk and return. An example of an asset is a stock, a bond, gold, or even real estate. Each asset has a difference risk/return profile. Some are riskier than others. According to Modern Portfolio Theory, the riskier an investment, the higher the projected return. Conversely, the less risky the investment, the lower the projected return. Most investment advisers and financial advisers coach their clients to spread their money among a variety of assets.

David Swensen, a highly regarded investment guru and manager for the Yale Endowment advises investors to invest 20% of their investable monies into real estate in his book “Pioneering Portfolio Management” (note: this is outside the value of your primary home).

Well-Diversified, Equity-Oriented Portfolios Provide a Framework for Investment Success
Asset Class Policy Target
Domestic Equity 30%
Foreign Developed Equity 15%
Emerging Market Equity 5%
Real Estate 20%
U.S. Treasury Bonds 15%
U.S. Treasury Inflation-Protected Securities 15%

Within real estate, you can allocate investable assets across different geographies, different property types (such as apartment buildings, retail strip malls, office buildings, warehouses and even industrial facilities) and also by investment type.

The two investment types are debt and equity. You can think of debt like acting as the bank. Banks lend money on real estate, whether it is to a home buyer or an investor who is purchasing a building to generate income from rents. In an equity investment, you own a slice of the property and share in the benefits of that ownership including upside from an eventual sale.

By investing in different regions and across real estate types, investors can avoid huge losses in the event of a boom or bust. It’s all about diversification!

Create an account or sign in.
Are you an Accredited Investor?
Must be 8 characters or more with an uppercase and lowercase character, a number, and a symbol.
By clicking "JOIN REALTYMOGUL" you are agreeing to our Terms of Service and Privacy Policy, and that you've had an opportunity to review RM Securities, LLC's Form Customer Relationship Summary.
Don’t have an account yet? Join RealtyMogul.
Forgot Password?
Questions? Our Investor Relations team is available to help 8 AM - 6 PM PST Monday to Friday. Contact us at (877) 977-2776.
Forgot Password
Enter your email address to receive a code to reset your password.
Enter the code sent to your email address below and your new password.

Resend Code


Welcome to RealtyMogul! We need to ask a few additional questions to get to know you.

Your Net Worth
Are you interested in 1031 exchanges?
Thank you!

We’ve received your information and updated your Investor Profile.

Welcome to RealtyMogul

As part of RealtyMogul's commitment to transparency, we want to inform you that you have been directed to our website from an unaffiliated third-party marketing company who is compensated up to $250 for each investor who registers on our site. RealtyMogul and its affiliates have no relationship with the marketing company other than this compensation arrangement. RealtyMogul and its affiliates are not responsible for the preparation or accuracy of, and do not explicitly or implicitly adopt or endorse, any content provided by the unaffiliated marketing company.