A reader says, ” I am a retired person. I have a portfolio of Equity, Debt and Investment Property (second home), which I have rented out to earn income. I have held the property for about 15 years but have not revalued it to the present market price. My Queries are: 1. How often should I revalue realty holding so that the value of my portfolio is realistically established? 2. What should be the ideal percentage of real property in the portfolio?”
If the property is self-occupied, its value is zero as it is a consumable. You use it daily and cannot do anything else as long as you use it. See: Why can’t I include my residential property as part of my net worth? When you decide to sell it, you can evaluate the property after you have sold it (big difference!), and you can include the corpus to your net worth (if you are not going to purchase another property).
The rules of the game are similar for rental property. As long as you receive rent from it, the property value has no meaning. It is a source of income for retirement planning with a tool like the freefincal robo advisor, which can accommodate three income sources. So, there is no need to reevaluate the property value until you decide to sell.
There is no ideal percentage of any asset class in a portfolio. It is up to the individual. In the case of real estate, if you go by the above reasoning, its value has no place in a portfolio!
Can we invest in real estate to get rental income after retirement?
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We should consider real estate as an investment only after investing enough for our financial goals. Real estate investment is an unnecessary luxury for most retail investors as they do not have enough to support their financial goals. For more insights, see: Can I invest in real estate for passive income after retirement?