How Much Liquidity Should You Keep Outside Real Estate?

Why Liquidity Matters More Than Investors Admit

Real estate has three structural characteristics:

1. It is illiquid

2. Returns are slow and delayed

3. Unexpected costs are inevitable, not theoretical

As explained in “Why Liquidity Is the Real Competitive Advantage”, the best opportunities do not appear when everything is stable — they appear when others are under pressure.

Without liquidity, even a “good” portfolio becomes fragile.

The Minimum Liquidity You Should Never Touch

Before discussing percentages, there is a non-negotiable base layer.

Safety rule:

12 months of personal + investment obligations

Example:

• Personal living expenses: €1,500 / month

• Property-related obligations (maintenance, loan gaps): €1,000 / month

➡️ €2,500 × 12 = €30,000

This amount is not investment capital.
It is emotional and financial stability capital.

Operational Liquidity for Property Owners

Beyond personal safety, every property requires cash buffers for:

• repairs

• vacancy periods

• taxes

• small but frequent expenses

Conservative rule:

€5,000–€7,000 per property

Example:

• 4 properties → €20,000–€28,000

As highlighted in “The Risks No Listing Ever Shows”, problems in real estate are rarely catastrophic — they are cumulative.

Strategic Liquidity (Where the Real Advantage Lies)

This is capital that:

• is not needed immediately

• is not invested impulsively

• gives you optionality

Practical range:

15%–30% of your total net worth

Example:

• Net worth: €400,000

• Strategic liquidity: €60,000–€120,000

This capital:

• protects you from bad timing

• allows you to act when others cannot

• keeps decision-making rational under stress

As discussed in “When You Should Sell — Even When Everything Is Going Well”, forced sellers almost always lack liquidity.

What Happens to Investors Who Are “All-In”

Consistently, they:

• postpone necessary repairs

• miss genuine opportunities

• panic during vacancies

• sell assets under pressure

The issue is not return.
It is lack of choice.

Liquidity Framework for Real Estate Investors

1. Life Safety Buffer

• Purpose: Cover personal and investment obligations

• Rule: 12 months of total expenses

• Indicative amount: €25,000 – €40,000

2. Operational Property Buffer

• Purpose: Repairs, vacancies, taxes, small unexpected costs

• Rule: €5,000 – €7,000 per property

3. Strategic Liquidity

• Purpose: Optionality, flexibility, opportunity capital

• Rule: 15% – 30% of total net worth

When You Should Hold More Liquidity

• When you have loans

• When rental income covers living expenses

• When you own many small units

• When your portfolio is near saturation

When You Can Hold Less Liquidity

• When you have no debt

• When you have stable external income

• When your portfolio is small and simple

The Role of Poli Real Estate

At Poli Real Estate, the discussion never starts with:

“How many properties should we buy?”

It starts with:

“How much liquidity must remain untouched for this strategy to survive real life?”

Because a strong real estate strategy does not only maximize returns.
It minimizes forced decisions.

Final Takeaway

• Liquidity is not wasted return

• It is freedom capital

• And it is the reason some investors last decades while others exit early

If you remember one thing:

Investors without liquidity work for their properties — not the other way around.

If you actively manage capital allocation between real estate and liquidity, submit your investment criteria at the contact button that follows.