Here’s Something for Investors Wanting a Rental Property

Investors looking for an alternative to traditional rental property options should consider this impressive growth and income-generation stock.

| More on:
House Key And Keychain On Wooden Table

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Buying a home remains the single biggest purchase that many of us will ever make. Unfortunately, getting into the position to purchase a home is getting harder with each passing year. In the white-hot markets of the GTA and Vancouver, the average price of a home is now well over $1.2 million. This effectively prices out first-time homebuyers as well as investors looking to buy a rental property.

The alternative to a traditional rental property

In the event that you don’t actually have a cool $350,000 sitting around for a down payment, there is hope. Investing in RioCan Real Estate (TSX:REI.UN) provides a similar opportunity to investing directly in a rental property without the day-to-day hassles.

For those that are unaware of RioCan, the company is one of the largest REITs on the market. RioCan has a focus on retail properties, but in the past few years, the company has begun to diversify into the residential segment. That residential segment poses a massive opportunity for investors, and here’s why.

As I mentioned above, homes in Canada’s major metro areas are, in a word, unaffordable. This effectively means that those looking for housing, such as first-time homebuyers, are being forced way out of the metro area. This means longer commute times and less access to the dining and entertainment options those younger buyers still look for.

RioCan’s residential segment, known as RioCan Living, consists of mixed-use residential and retail towers that are located along transit corridors of Canada’s major metro areas. This gives prospective tenants easy access to everything they need.

Further to this, the mixed-use aspect of those developments caters to another growing shift in the market. Consumers are moving away from traditional brick-and-mortar retailers, opting to shop on their mobile devices. This means that traditional retailers are seeing a drop in foot traffic. This factor alone makes RioCan a unique option for investors looking for rental property income.

In other words, RioCan is diversifying away from its brick-and-mortar retail in lieu of mixed-use properties. That trend (and the income-generating potential) will only grow in the coming years. Currently, RioCan has 14 mixed-use properties in development.

What else does RioCan offer?

Apart from the diversified appeal of investing in RioCan, the REIT offers would-be investors what is arguably the best part of being a landlord — the ability to generate income. RioCan offers investors a handsome monthly dividend that currently works out to an impressive 4.68% yield.

To put that earnings potential into perspective, a $40,000 investment would provide just over $150 per month in income. Perhaps best of all is the fact that unlike being a landlord with a rental property, you don’t have to worry about chasing down tenants for rent every month or dealing with maintenance.

In my opinion, RioCan is a stellar long-term investment that should be a core part of every portfolio.

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 Demetris Afxentiou has no position in any of the stocks mentioned.

More on Dividend Stocks

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Stocks Right Now

These three TSX stocks are my favourite performers. All have strong dividends, future growth, and historic performance behind them.

Read more »

Dividend Stocks

Passive Income Generator: 1 Dividend Stock Yielding 6.16%

A high-yield energy stock that pays monthly dividends is a reliable passive income generator for investors.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Cheap Canadian Dividend Stocks to Buy Now for Passive Income

Investors seeking quality passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

While these high-quality dividend stocks are oversold, they are some of the best stocks to buy for passive-income seekers.

Read more »