How to Make $1,200 Per Month in Rental Income: Boardwalk REIT, Dream Global REIT, Real Estate Investment Trust

Here’s why RioCan Real Estate Investment Trust (TSX:REI.UN), Dream Global REIT (TSX:DRG.UN), and Boardwalk REIT (TSX:BEI) all belong in your portfolio.

| More on:
The Motley Fool

You don’t need an MBA to get rich in real estate: buy a few properties, take care of your tenants, and pay off the mortgages.

You collect rent month after month and every year your property values go up. It’s no wonder many people retire on the money earned from their rental properties!

But aside from cashing those rent cheques, becoming a landlord is not for everybody… unclogging toilets… dealing with tenants… and taking out big mounds of debt.

However, there is another way to collect monthly rental income. And the best part is, you don’t even have to own an acre of land. Let me explain…

Earn a monthly ‘rent cheque’ without becoming a landlord

Simply put, I’m talking about buying real estate investment trusts, or REITs.

As regular readers know, a REIT is simply a real estate management business. They own properties, collect rents from tenants, and pass on the income to their investors. And compared to owning rental properties, there’s no better investment in the world. Here’s why…

REITs are money machines. Thanks to a special tax loophole, these trusts pay ZERO corporate income taxes. No, that’s not a typo.

In exchange for this privilege, these trusts are required by law to pass on all of their profits to unitholders. This explains why REITs pay such consistent, oversized distributions. Many of these trusts sport yields between 5% and 10%.

Rentals are risky. When you buy a property, you can have a big percentage of your net worth tied up in a single asset. That’s a giant bet on one neighborhood… in one city… in one country.

REITs, on the other hand, are diversified. Many own hundreds of properties across Canada and around the world. This includes not only residential properties, but retail and industrial assets as well.

Rental properties are illiquid. Realtors charge 5% of the property’s value on each transaction. Don’t forget about lawyer fees, transfer taxes, title insurance, and sleeping pills (buying a house is stressful). Immediately after you purchase an investment property, you’re already down 7% to 10%.

Buying a REIT, in contrast, is just like buying a stock. And just like any equity trade, you pay a small broker commission. These transactions are usually completed faster than I can refresh my computer screen.

However, the thing I like best about owning REITs: there’s no hassle. There are no tenants to deal with or toilets to unclog. Every month a payment is deposited directly to your brokerage account.

While Canadian landlords are stuck shoveling driveways this winter, I will be counting my rent cheques from a beach down south.

Collect your first ‘rent cheque’ by December 15

There are a number of high-quality REITs to choose from. Here are a few to get you started…

RioCan Real Estate Investment Trust (TSX: REI.UN): RioCan is one of my favourite names in this space. The trust’s business empire totals nearly 79 million square feet of retail real estate. If you live in Canada, you have property visited several of its shopping malls and big-box stores.

Boardwalk REIT (TSX: BEI.UN): Boardwalk is Canada’s top residential landlord. Don’t be dismayed by the trust’s meager 3.3% yield. Over the past decade, the trust has increased its payout at a 22% compounded annual clip.

Dream Global REIT (TSX: DRG.UN): Dream owns 15.7 million square feet of grade A office space throughout Germany. Today, the trust pays a monthly distribution of 6.67 cents per unit, which comes out to an annualized yield of 9.1%. That means with a $160,000 investment (less than the price of most rental properties), you can collect $1,200 in monthly income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

TFSA Monthly Money: How to Generate Consistent Tax-Free Passive Income

Adding these two attractive Canadian dividend stocks to your TFSA now could help you earn reliable monthly passive income for…

Read more »

analyze data
Dividend Stocks

3 Magnificent TSX Dividend Stocks to Buy and Hold Forever

Do you want to hold some quality dividend stocks for the decades ahead? Here are three stocks worth holding for…

Read more »

Dividend Stocks

How Much Will Canadian Utilities Pay in Dividends This Year?

Investors can stabilize their long-term stock portfolio returns by accumulating quality utility stocks on meaningful dips.

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

The 3 Top Canadian REITs to Buy in May 2024

These REITs in strong sectors are well-positioned to deliver passive income through regular dividend payments.

Read more »

Family relationship with bond and care
Dividend Stocks

Dividend Investors Can Earn $500 Every Month or More With the Right Stock Offering a 6% Yield

Two high-yield monthly income stocks are attractive options for dividend investors, including retirees.

Read more »

Question marks in a pile
Dividend Stocks

Down 14%: Is This Toymaker Stock a Good Buy in MAY 2024?

The right time to buy a discounted stock can be difficult to pin down, especially when there are no clear…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend Stocks That Could Create $2,484.40 in Passive Income in 2024

These two passive-income stocks offer not just dividends but returns as well! And should continue to do so for at…

Read more »

lab worker inspects test tubes
Dividend Stocks

Time to Pounce: 2 Ultra-High-Yield S&P 500 Dividend Stocks That Are Screaming Buys Right Now

More than a dozen S&P 500 components sport "ultra-high yields." Two of these time-tested titans are begging to be bought…

Read more »