Surprisingly, Canada’s real estate market showed no signs of slowing down despite 2020’s terrible pandemic. Following a dip in sales and a short-lived price correction, housing prices continued higher. Millennials looking for a nice entry point to finally buy that home, well, those dreams dissipated rather quickly.
The dream of owning a home for many young Canadians appears to be getting further and further out of reach. For those in Vancouver or Toronto, those dreams seem like a near-impossibility today.
To make matters worse, those who didn’t beg their parents, friends and neighbors for money for a down payment and then stretch their budget to the absolute max with their mortgage payments are wishing they had doneso. The capital appreciation real estate has provided has outpaced stocks in recent decades. Indeed, it’s been one of the best-performing historical asset classes out there.
Never fear. Those looking to take advantage of the long-term growth real estate provides have opportunities to do so. While this isn’t exactly owning a home, it’s about as close as many young investors may be able to get right now. And who knows, after years of growth and prudent saving, a down payment might be in the cards.
Here’s one great way investors can load up on real estate with what they can afford today.
Real Estate Investment Trusts (REITs) are one of the best ways to gain diversified exposure to real estate.
REITs hold a basket of properties in the form of a trust. Investors can buy units of the trust, and are paid distributions (dividends) on a regular basis, which allows investors access to real property, without the hassle of getting a mortgage, entering into a bidding war, and paying excessive closing costs. All that is covered, and the kicker is – investors are paid very nice dividends! It’s the anti-mortgage every millennial is looking for.
RioCan Real Estate Investment Trust (TSX:REI.UN) is one of Canada’s largest REITs. The trust focuses on developing and managing mixed-use retail-oriented properties in high-transit areas. Its portfolio is compose of more than 200 retail and mixed-use properties and 14 under-development properties with an NLA of 38.26 million square feet.
RioCan mainly generates rental revenues through its retail real estate portfolio, which accounts for the vast majority of its total annual revenue. The REIT also holds office and residential property in smaller amounts.
For those looking for a high-leverage play on the recovery coming out of the pandemic, this is it.