Canadian investors seeking extra cash likely first come across the idea of buying up real estate. However, as I’m sure I don’t have to tell you, this is a highly costly endeavour. And one that certainly comes with both risks as well as rewards.
These days, buying and renting out a property simply doesn’t seem possible. That being said, there are still ways to get in on real estate rentals. What’s more, you can use that cash to make even more passive income from investing in a dividend stock. So, let’s look at those options, shall we?
Real estate crowdfunding
Rather than invest all your cash into real estate that may or may not provide you with ample passive income, consider real estate crowdfunding. This is where investors pool together funds from multiple investors. It allows individuals to invest in real estate without the need for large amounts of capital or even direct ownership of properties!
Canadians can instead use online platforms such as NexusCrowd, addy Invest, and Fundscraper. These will allow you to invest into the projects, each varying in their minimum investment amounts and fee structures. You can then choose an investment based on your own risk tolerance and investment goals.
After researching the projects, you contribute funds to the project or real estate investment. Then the real estate property is managed by the company, including property acquisition, development, leasing, and property management.
How you get cash
As the company is managed, you can then look at how the project is progressing through regular updates from the platform. Investors then earn returns on their investment through rental income, property appreciation or interest payments, depending on the type of investment.
Returns are then usually distributed to investors periodically, such as monthly, quarterly, or annually, just like a dividend. What you’ll also want to plan is your exit strategy with this type of investment.
Usually, these investments will have a predetermined exit strategy, such as a sale of the property or refinancing. Once the property matures or reaches those objectives, investors can then receive their initial investment, plus any more returns. Overall, you can receive diversification from the investments, passive income, transparency on your project as well as accessibility to it at any point.
Pick up a dividend stock for even more
So, let’s say that you invest $10,000 into a crowdfunding property for the next year. You then see an average of 9% return on your investment. This could me less, or it could be more, depending on certain factors. But 9% is a fairly strong average. That would create $10,900!
You then put that investment into a dividend stock like Granite REIT (TSX:GRT.UN) for more stable realty income. As it’s an industrial properties stock, it offers strong rents, occupancies, as well as a growing sector for future investment — all with a dividend yield at 4.4% as of writing. If shares were to hit 52-week highs, this is what you could achieve.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| GRT.UN – now | $75 | 145 | $3.30 | $478.50 | monthly | $10,900 |
| GRT.UN – high | $87 | 145 | $3.30 | $478.50 | monthly | $12,615 |
You could create $1,715 in returns and $478.50 in dividend income, plus $900 from crowdfunding. That’s total passive income of $3,093.50 in 2024 alone!
