Real estate is in a black hole, says Louis Basenese. The five largest U.S homebuilders lost $3.4 billion in the latest quarter. Home-builder sentiment is at a 22-year low. Investors are salivating over the prospect of a bottom in the real estate market. But Loius says it’s best to wait. A clear-cut signal that the housing market has bottomed isn’t coming…

I hate to break the news to you, but no single data point or insider perspective is going to fortuitously signal an unambiguous bottom. Not new home sales… not building permits… not the latest inventory data… nothing. And nobody’s going to give us the “all clear,” either.

Waiting for irrefutable proof of the turn is flawed anyway. The stock market is a forward-looking beast. When housing prices “officially” bottom, real estate stocks will likely have already run-up in price. But there’s a surefire way not to get caught watching the paint dry…

Stick to the tried and true. Buy sound companies and have the discipline to stick to proven asset allocation. It makes all of the market indicators and posturing above pointless.

But that also means committing to owning shares of companies that are out of favor with the investing public. And no sector has been more discarded than real estate.

I suggest a low-risk, low-hassle, low-cost approach. Leave active management behind and consider the Vanguard REIT Index (VGSIX). It will give you the broadest real estate exposure possible for an almost negligible expense ratio of 0.2%.

Public Storage and Equity Residential Properties are among its top five holdings. Both have returned over 12% this year. The fund also maintains consistent dividend strength, yielding more than 5% right now.

And here’s another little portfolio-boosting secret: This year’s big losers are often next year’s Wall Street darlings. Historical data bears that out. And so will holding a part of your portfolio in real estate.

Source: How to Play the Real Estate Rebound…