The Motley Fool

Passive-Income Alert: 1 Valuable REIT to Collect the Income You Need

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Becoming a landlord can be defeating the purpose when your goal is to generate passive income. It can actually be like a job when you have to manage a few properties, including collecting rent, dealing with tenants, and property maintenance.

There’s a better way. Investors can buy top real estate investment trusts (REITs), which allows you to generate true passive income from real estate assets.

All you have to do is invest and watch dividends magically appear in your account. It’s very easy to generate some serious passive income from REITs. If there’s one REIT I’d own for passive, growing income, it’d be Brookfield Property Partners (TSX:BPY.UN)(NASDAYQ:BPY).

Collect the income you need

As of writing, Brookfield Property is paying safe dividends of 6.29% annually. That’s a much bigger income than investing in properties in major Canadian cities after their prices have gone sky-high, particularly over the last few years.

To earn $1,000 per month from Brookfield Property, you’ll need to invest $190,779 in the stock. If that’s too much to invest upfront in the absence of a loan, you can aim for income of $500 per month or $100 per month.

To earn $500 per month, you’ll need to invest $95,390. You can get $100 per month from Brookfield Property with an investment of $19,078.

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Why Brookfield Property is the top REIT to own

Investing in Brookfield Property is much better than investing in a few properties. Brookfield Property invests globally. Therefore, it can source the best investments with the least risk at any point in time.

Additionally, Brookfield Property is anchored by a core portfolio of high-quality office and retail assets that generate stable and sustainable cash flow to support its dividend. It also runs an opportunistic portfolio that aims for higher returns of 18-20% versus its overall goal of 12-15%.

Running the real estate stock is superb management who have a proven strategy and the operational expertise to invest in mispriced properties, repurpose the properties if needed, and rent them out for higher rental income or sell them outright for hefty profits.

Brookfield Property is a great value

Properties in major Canadian cities are pretty pricey, which means that their near-term price appreciation is nil or low, at best. Here you have Brookfield Property that’s trading at about a 27% discount from its fair value, offering much better upside prospects over the next few years.

Investor takeaway

At the end of the day, it comes down to investing regularly and reinvesting dividends in quality dividend stocks like Brookfield Property. Do that and you’ll create your own passive-income machine more quickly than you’d ever imagine.

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 Kay Ng owns shares of Brookfield Property Partners. Brookfield is a recommendation of Stock Advisor Canada.

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