bizaro86

Yours Truly, I have more or less done that for years. We financed a major home reno from a Heloc, and other life related items rather than increasing the mortgage. Then I deduct the interest against investment gains. After the market run up the Heloc is empty, and I am paying whatever advances the bank allows me on the mortgage each year. If there is a major market downturn I can borrow the money back instantly to invest. Of note: we got the Heloc in winter 2010, a year after the meltdown. The drawback is the flexible interest rates (its 3.75%) but it looks like the BofCan wont raise rates until the Fed does, and judging by the "disinflation" numbers that isn't happening soon. From what I understand, if you use your HELOC to invest, you cannot use it at the same time for other stuff like home reno. Or I should say, you can do that, but you won't be allowed to deduct your interest. You can deduct interest only if your HELOC is use as an investment vehicle only. Am I right on this? You can only deduct the portion of the interest used for investments. So if you have a 100k heloc and 50k is stocks and 50k is a new kitchen, you can only deduct interest on half. The proportion holds for the life of the loan too, so you can't pay back 50k and then start deducting it all. I assume the Uccmal actually sold investments to pay for the renos, then borrowed money on the HELOC to buy new investments, thus making the interest tax deductible. Interest on debt for home renos isn't tax deductible in Canada, whether borrowed on a heloc or any other way.

It's more like adding a bond position. Assuming you have enough equity in your house that returning it to the bank isn't likely, or you have a recourse mortgage (in Canada) then any downside from owning the house you already have. A house with a mortgage is more like owning real estate equity and owing debt. Since owing debt is equivalent to being short a bond, paying it off is equivalent to buying a bond.

I think the facts of the situation matter. I recently sold a couple of rental condos I bought out of foreclosure in 2009 in Canada. My IRR on them is in Packer/Ericopoly range, and I'm taking the money and putting it against my personal residence mortgage, where the before tax IRR will be <5%. Mortgage interest in Canada is not tax deductible on a personal residence, and my mortgage only has 2 years left until renewal, so those arguments don't apply here, but do in the US. My wife will sleep better with less personal debt, and that's a good investment, imo. We also have undeployed cash in our brokerage accounts, so adding more to them without high conviction ideas doesn't seem likely to be a winning strategy. If it was still 2009 where I was buying bargains left right and center on margin my opinions would probably be different. If you have tax deductible long term debt and high conviction ideas, I'd use the high conviction ideas. Otherwise, I'd pay down the debt.

Looks like a great find! Any thoughts on the quality of the management? G&A consistently at 3.5MM per year seems pretty high for a company that has as its business renting out real estate anad collecting ~15-16MM of rent per year.

At 71, you have 3 choices for an RRSP. 1) Take a lump sum distribution and pay tax on the full amount 2) Convert to an annuity 3) Convert to a RRIF. This is exactly like an RRSP, except that you must withdraw (and pay tax on) a certain amount of the balance every year. The amount varies by age, at 71 its 7.38% of your account value. So if you have a 2,000,000 RRSP, you will have to take out 147,000 when you are 71. However, you can use a self directed RRIF, which has all the same allowable investments. If you want to hold 100% leaps in your 70s, you can. The table of mandatory withdrawals is here: https://www.woodgundy.cibc.com/wg/reference-library/topics/retirement-planning/rrsp-maturity-options/rrif-minimal-withdrawal.html

I think there are two possibilities here, depending on your confidence and the amount of time you have to put into this. You could probably build a reasonable quality portfolio using cheap ETFs, rebalance once a year, and do nothing else. The alternative choice is to replace ETFs with individual securities. This requires much more work, as you'll have to monitor the securities, but offers them the potential for a greater return. I do a mixture for my father-in-law, where the base of the portfolio is ETFs, and I replace with individual securities when I believe there is better value. For example, I sold some of his REIT ETF and bought pure industrial reit aar.un on Toronto. I think its better value than the REIT index, and especially like the long duration of their leases and mortgages. Article below has a more detailed look. http://seekingalpha.com/article/1746802-pure-industrial-reit-safety-at-7-percent-yield

I run a portfolio for my father in law with a similar set of goals. A diversified set of well selected income securities is how I've chosen to go about it, outside of ETFs as mentioned above. I pick individual issues, and leave them alone. A couple of choices include TY.P, a pref on a closed end fund. Coverage here is massive, and it trades a 12.5% discount to face value. Current yield is 5.7%. Interest rate risk due to perpetual nature, but if it meets the portfolio goals and you have a long time horizon, it might work. Other choices include UMH.PR.A and ELS.PR.C, both prefs from mobile home park REITs. I also have a number of Canadian income securities in this portfolio, things like INN.DB.G and PMT.DB.E, things where I think the coverage is good and the 7% YTM is attractive. As mentioned above, small positions in higher risk income securities isn't unreasonable, if they're uncorrelated and you like the underlying. I have a small SSRAP position in this portfolio, if you like SHLD. Another position I have in small size is EE.DB in Toronto. 35% yield to maturity, 50% discount to face value. It's a small E&P where the senior lender is looking to reduce exposure, and the debt is nearly due. However, their recent production not yet publicly reported (except through the Alberta gov't system) is decent, and they have reasonable asset/income coverage. I think its highly likely to work out. I own this one myself also (much larger position than in my Father in laws account) as I really like the risk reward here.

This article says the store closing didn't have its lease renewed. It also mentions the owner is Fort Dodge Realty associates of Hoffman Estates, Ill. It seems like an odd coincidence to me that the owner of the store is headquartered in the same small city on the outskirts of Chicago as SHLD. Anybody know whether this is actually a SHLD subsidiary, and they're just saying lease renewal for PR/employee reasons?