REITs, or Real Estate Investment Trusts, are companies that own and operate portfolios of real estate assets. This can include residential, commercial, warehouses, or any conceivable mix. In short, they are some of the best-kept secrets that investors can safely buy in nearly any market.
And given the volatile year we’ve had and rising interest rates, there’s an opportunity for investors to research REITs they can safely buy.
Here are two REITs you may want to consider for your portfolio.
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Spread the risk to 450 properties instead of just one
Canadian Apartment Properties REIT (TSX: CAR.UN) is a great fit for investors looking for alternative options in the housing market. Canadian Apartment Properties boasts a portfolio of over 450 residential sites located across seven provinces, as well as in the Netherlands.
Outside that core residential portfolio, the REIT also maintains a portfolio of over 75 land-lease sites. Collectively, this makes the REIT one of, if not the biggest, REIT in Canada with a whopping $8.5 billion market cap.
In other words, Canadian Apartment REIT is a well-diversified option for investors to consider.
Turning to income, the REIT boasts a monthly distribution with a yield of 2.85%. A $30,000 investment in Canadian Apartment Properties will generate a monthly income of just over $70.
Retail vs residential. Why not opt for both?
Prospective landlords need not worry about mortgages and rising interest rates. RioCan Real Estate (TSX: REI.UN) offers would-be rental property landlords an alternative to the traditional buy-and-rent passive income play.
RioCan is one of the largest REITs in Canada, offering a portfolio of over 200 properties that have a focus on commercial retail. In recent years that focus has shifted to mixed-use residential, and that is where the opportunity for investors lies.
RioCan calls that emerging mixed-use segment RioCan Living. It comprises residential towers that are atop several floors of commercial retail. The properties are situated along high-traffic transit corridors in Canada’s major metro areas, making them very in-demand options to consider.
Not only does this transition RioCan away from primarily retail properties but it also caters to the housing affordability shortage. And like a rental property, RioCan offers investors a monthly distribution.
Other notable advantages for would-be landlords apart from the obvious lower risk are the lack of a hefty down payment and no property taxes. There’s also the juicy 5.33% yield on offer, which is among the best on the market.
REITs you can safely buy today and hold for a decade or more
No investment is truly without some risk, and that includes both REITs mentioned above. Fortunately, REITs are lower risk when compared to a landlord purchasing a property to generate a passive income stream.
In my opinion, REITs like RioCan and Canadian Apartment Properties warrant a small position in any well-diversified portfolio. Buy them, hold them, and watch them generate a juicy retirement income stream.
