Proof ... real estate is NOT dead!

With the year wrapping up in a few weeks, I thought it’d be interesting to see how the investment ideas I’ve posted have done. And I since think there is always a way to make money in real estate, I was particularly interested in how the REITs I picked have performed.

So let’s take a look:

On March 14, 2010 and again on November 30, I told you about a REIT I’ve owned for years, Public Storage (PSA). Since I first mentioned it, it’s up 47%. And the 1-year return is 32.55%.

On December 30, 2010, I gave you four REITs in the health care sector to check out. Here they are with their 1-year returns:

• Ventas (VTR) up 7.01%

• HCP, Inc. (HCP) up 18.04%

• Health Care REIT (HCN) up 14.92%

• Senior Housing Properties Trust (SNH) up 5.24%

Then on September 27, 2011, I told you about three Canadian REITs that were worth a look. Granted, it hasn’t even been three months. So for a long-term investor like me performance one way or the other doesn’t really matter. But they are all up. And their 1-year returns are pretty impressive.

• IA Ecoflex Real Estate Income Fund (IAECREIN CN) up 14.76%

• BMO Equal Weight REITs Index ETF (ZRE CN) up 11.15%

• Investors Real Property Fund (INVRLPRA CN) up 6.79%

Seven of the REITs are cash cows, too, with dividend yields ranging from 2.03% to 7%.

Compare the above returns to SPY, the exchange traded fund that tracks the S&P 500; it’s up 5.22% over the past year.

I’m not suggesting that you put your entire investment portfolio in real estate. That would be as irrational as putting everything in gold (GLD up 24.1%). But a small allocation (10%-15%) could make a lot of sense.


Best wishes,

George

A Real Deal on Some of the Best Skiing in North America

Are you a snow ski enthusiast?
 

How does this sound to you: 

• Lift tickets that only cost $55 (compared to $90 in Park City, $102 in Vail),
• $32/day rental for skis, boots and poles,
• NO lift lines,
• Moderate temperatures, and
• Some of the best skiing in North America!

Click here to check it out for yourself.

When a skiing friend told me about Brundage, Idaho, a few years back, I wasn’t too excited about the 7640 elevation. After all, other areas offer higher peaks. So the runs might not be quite as long as those found in Vail, Park City or Canada. But let me tell you, I’ve gone there three times ... and I absolutely loved it! And I can almost guarantee you will, too.

What’s more, it’ll cost you a heck of a lot less than going just about anywhere else. 

We have a condo in McCall, Idaho that sleeps 10 for February 6 through February 13.

If you, or anyone you know, is interested in tagging along (for all or just  part of the trip) to share the cost of the rental car and food (the condo is already paid for!) and have a great time at a bargain basement price, let me know ASAP and I’ll answer any questions.

Best wishes,

George

Looking to add real estate to your portfolio, then read this …

Real estate has taken a bloody beating over the past five years. And as I’ve written several times in this blog (most recently in September), now could be a great chance to add a piece of dirt to your portfolio.

If you agree, then you should read about a Morningstar study that found the REIT returns beat real estate funds.

You can see it here.

Best wishes,

George

The CLASS Act is not a class act

Back in October 2009 and again on March 15, 2011, I wrote about the CLASS Act. That’s the Community Living Assistance Services and Support Act), the long-term care insurance plan that’s within Obamacare.

There has never been any doubt in my mind that whole concept of this plan is built on thin ice — another government sponsored Ponzi scheme. Simply put: There won’t be enough money coming in to support the number of Baby Boomers who could need long-term care.

And just recently, a Congressional committee detailed the insolvency of the CLASS Act in a report titled: CLASS’ UNTOLD STORY: Taxpayers, Employers, and States on the Hook for Flawed Entitlement Program.

It seems the committee found that the Obama Administration’s Department of Health and Human Services (HHS) was aware that the program was unsustainable and withheld this information from Congressional leaders and the American people prior to the passage of the law, all in an effort to achieve phony savings to offset the bill’s massive spending and taxpayer-funded price tag.

Several Committee members voiced their concerns; for example:

• Rep. Joe Pitts said, “The CLASS Act is an ocean liner that was put to sea with a giant hole in the hull.”

• Rep. Michael C. Burgess said, “Instead of focusing on reducing the costs of long term care insurance for Americans, the president’s health care law exploits tax payer confidence through creating another program that is poorly structured and will cost taxpayers even more money.”

• And from Sen. Lindsey Graham, “Remember Enron accounting? Well, I believe even Enron executives would be embarrassed by the accounting gimmicks created by the CLASS Act."

So now with further confirmation that another government plan for older Americans is doomed, what should you do now to make sure you can get the care you may need some day, without leaving you flat broke?

First, don’t stick your head in the sand. Become informed. Learn what government programs are available, before you or a loved one needs them.

Second, evaluate the options, including your ability to pay for your own care.

Third, develop a plan for dealing with the day when your health changes. Then share it with your family.

And if you’re not sure how to go about putting these steps into play, I suggest you pick up a copy of the latest update to A Boomer’s Guide to Long-Term Care.

Best wishes,

George

Real estate’s bright spot

I’ve always liked real estate: Single-family rentals, duplexes, and self-storage facilities. As long as you buy it right and manage your expectations, real estate can provide a good cash flow and long-term growth.

And I’ve written before how real estate investment trusts (REITs) can let you dip your toe in this sector without worrying about the day-to-day hassles that come with being a landlord. Let’s face it, though, the market really stinks now, especially in the U.S.

Well, you might want to take a look at our neighbors to the north. It seems the Canadian real estate market has weathered the global financial crisis better than most.

Among the reasons:

• Strong exports of oil and other natural resources

• Strong Canadian dollar

• Low borrowing costs

Watch this YouTube video to learn what the Canadian REITs are doing in their own country and around the world.

And here are three Canadian-based real estate funds you might want to check out:

• IA Ecoflex Real Estate Income Fund (IAECREIN CN)

• BMO Equal Weight REITs Index ETF (ZRE CN)

• Investors Real Property Fund (INVRLPRA CN)

Best wishes,

George

Boomers not up-to-date on Medicare

Boomers are turning 65 at a record rate … 10,000 a day in fact … which means they’re eligible for Medicare.

However, a survey sponsored by the National Council on Aging and United Health Care found that many boomers are in the dark when it comes to Medicare. For instance,

• 46% of respondents have never shopped around for better Medicare coverage because many (41%) thought they couldn’t save any money,

• 35% were confused by Medicare,

• 16% didn’t understand Medicare at all,

• Less than half were familiar with the Medicare prescription drug “donut hole” or coverage gap, and

• Only 12% described their understanding of the health reform law as excellent or good.

What’s more, many respondents were not aware of extra benefits that can provide critical assistance, including Medicare Savings Programs, which help people with limited income pay for some or all of their Medicare costs, and Extra Help, which helps pay for prescription drug costs.

Look, no one knows what the future holds for Medicare. But ignoring what it currently offers could cost you big bucks down the road!

Click here to find more details about the survey and links to a bunch of helpful sources on Medicare.

Best wishes,

George

P.S. With so much uncertainty surrounding Medicare, protecting your finances from the ravages of long-term care is more critical than ever. Learn what you can do about it now.

Reader with Real Estate Questions

I had the following come in from a reader:

“George, we are considering purchasing a rental property. The question we have is: Can our adjusted gross income (if it is too high) preclude us from deducting any losses (depreciation, property taxes, mortgage interest) from our current income taxes?

“Also, do people incorporate and what would that do for us? I appreciate your input.” —Kay

My reply …

“Kay, your income should not prevent you from deducting losses. For more info, here are the instructions.

“Most taxpayers, including me, own the property personally and just file a Schedule E. Sure, you could incorporate. Tax wise, though, I don't see what that would accomplish for you. And a mortgage company will make you personally guarantee the note.

“Yes, it might shield you from liability in case of a law suit. But a good liability insurance policy can protect you even better.”

Best wishes,

George

P.S. Do you have a question about your real estate investment? Post it here or drop me an e-mail.