Tuesday, November 30, 2010

Ready to Add Some Real Estate to Your Portfolio?

I’ve always liked real estate. And I think it’s something most investors should own. I know … the past few years have stunk for anyone who got caught up in the herd looking to get in on the boom earlier this decade. The last three rental properties I sold in 2005 and 2006 became bidding wars among crazed buyers. Indeed, it was insanity. So with the real estate bubble popped and prices hitting, or coming close to hitting, their lows this might be a good time to add some real estate to your portfolio. Now I’m not saying you should run out and buy a rental property. Believe me, they’re a lot of work, and you have to watch them like a hawk. And when you use leverage, you walk a shaky tightrope between getting double-digit returns and massive losses. But overall, real estate has treated many investors very well. According to the National Association of Real Estate Trusts, REITs have put the S&P 500 index to shame over just about every conceivable historical period. In fact, over the last 10 years, REIT returns averaged 10.2% annually while the S&P 500 was stuck at -0.8%. REITs own a portfolio of properties. Many focus on a particular sector, such as medical facilities, self-storage warehouses, office buildings, resorts, apartments for college students and overseas properties. Most pay a pretty decent yield. One that I’ve owned for a long time is Public Storage (PSA). I wrote about it back in March. It currently pays 3.3%, which is darn good in today’s environment. You can buy and sell REITs just as easily as any other stock. For good list of REITs go to: http://www.reit.com/AboutREITs/REITDirectory.aspx. Best wishes, George

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