Business Vs Real Estate Capital Allocator
10-Year capital allocation model contrasting leveraged real estate with small business equity
Blended Portfolio
Passive Real Estate
Operating Business
Allocation Parameters
Initial Capital
$50,000
Total initial liquid capital deployed at Year 0
Real Estate Down Payment %
25%
4.0x asset leverage multiplier (25% down)
RE Annual Appreciation Rate
5.0%
Compounding property value growth + rental amortization
Business Annual Growth Rate
12.0%
Annual operating revenue and earnings expansion
Active Management Hours
10 hrs/wk
Sweat equity invested into business operations
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Blended Total Wealth
$201,800
Year 10 Capital Return
100% Real Estate Path
$218,400
Leveraged Equity + Amort
100% Business Path
$185,200
Risk-Adjusted Terminal Equity
Strategy Profile Assessment
Balanced Growth with Moderate Risk
SBA 10-Yr Rate: ~66%
Sweat Equity: Active
Real Estate Mechanics
Leverage Multiplier:
20-25% down lets you control 4x to 5x the asset base.
Downside Buffer:
Tangible physical asset with rental cash flow covering debt service.
Time Commitment:
Primarily passive once tenant & property management are in place.
Operating Business Dynamics
High Upside Ceiling:
Growth compounding from operating earnings and sweat equity.
Risk Heuristic:
SBA data indicates ~66% small business survival over 10 years.
Execution Intensity:
Requires constant oversight of sales, marketing, and staffing.
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