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URL: http://boards.fool.com/hi-doc-in-thinking-about-various-asset-classes-29872860.aspx
Subject: Re: Asset allocation	Date: 2/26/2012 7:39 PM
Author: Dwdonhoff	Number: 70223 of 72274
Hi Doc, *In thinking about various asset classes where does fully paid off rental property fall? Would that part of a retirement portfolio be considered in a manner similar to bonds?* Income real estate is indeed its own class... and one most folks fail to fulfill and attempt to replace with alternatives & synthetic analogues. If you feel you are overweighted in real estate as equity, you can rebalance without an all-or-none sales event by simply leveraging the appropriate amount of equity to rebalance the cash value elsewhere. Obviously, long-term real estate leverage (even on investment property) is at lifetime lows, and fairly easy to outperform in returns from similarly safe alternative investments, so this should not be a hurdle to your planning. As far as a prognosis on the validity of holding rental income assets (regardless leveraged or not,) I suspect we are unlikely to see even up to an additional 10% softening in the less stable of markets... and more likely a flattened future face value appreciation overall for probably 10-20 years plus. YIELD, on the other hand, is just at the beginning of what is most likely to be a significant bullmarket, both in upward reach and longevity. The longer we go before a non-government subprime mortgage industry is allowed to re-sprout, the longer & stronger the rental demand market will be. Your income property will very likely outperform virtually any & every safe alternative income vehicle you own. Hope this is helpful. Dave Donhoff Leverage Planner
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