I am in what I suspect is not a particularly unique situation, but still doesn't fit into the standard model (I think).
I work and live in an area that has not seen negative rel-estate price changes in my lifetime and is (in my opinion) likely to grow over the next 10-30 years (prices grow that is).
I am 30 and have ~$450,000 in assets about half in real-estate, about ~$150,000 in 401k and other retirement, and about ~$100,000 in non-retirement stocks. I am considering retaining my current real estate investment (the condo I live in) but transitioning it to a rental property (my models make me %6 when I am extremely conservative, and %15 when I am the least conservative), and buying a bigger place for myself.
With the real estate income I would be paying ~%60 of my income to my two properties. Looking at the cash flow I would still be able to maintain company match on my 401k and live my current lifestyle (I live cheaply).
I believe that this is a reasonable investment, as I can leverage my money in a situation where I believe we are due for an increase in both inflation and interest rate increases, but it goes against the "buy a modest house" rule that seems so popular. Am I missing something? When if ever are there exceptions to the "rules"?