The Smartest Real Estate Stocks to Buy With $1,000 Right Now

The real estate market is a ripe investment opportunity. You can invest $1,000 in these REITs and benefit from property price recovery.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published December 24, 2024 9:30 pm EST

The time is ripe to invest in the stock market, with the TSX Composite Index seeing a correction. While you enjoy the holiday season, your money can keep working on the sidelines. The next year could see some recovery in real estate stocks as interest rate cuts make mortgages affordable. Moreover, the Canadian government’s decision to cut immigration targets by 40% could bring some relief to the housing sector.

concept of real estate evaluation — Source: Getty Images

Smartest real estate stocks to buy with $1,000

The stock market is in a bearish momentum amid uncertainty around U.S. president-elect Donald Trump’s policies. The U.S. Fed and Bank of Canada are closely watching the impact of government policies on inflation and consumer spending. This uncertainty has pulled down even the fundamentally strong stocks.

The real estate market presents a good investment opportunity to benefit from the economic recovery. Here are a few real estate stocks worth buying with $1,000.

CT REIT

CT REIT (TSX: CRT.UN) is the retail real estate investment trust (REIT) that witnessed a 5.8% correction in the unit price in December. The dip comes on the back of bearish market momentum. However, the real estate arm of Canadian Tire continues to enjoy strong earnings and occupancy rates. At a 99.4% occupancy rate and fair market value of property stabilizing, net income surged 56% in the nine months to 2024. Any appreciation in the value of CT REIT’s property portfolio will be reflected in the net asset value.

At the end of the third quarter, REIT’s net asset value per unit stood at $16.95. The unit is trading at a 17% discount at $14.46. Now is a good time to buy the unit at a discount and lock in a 6.36% yield. The REIT increases its annual distribution per unit by 3% in July. That could increase your yield to 6.6%.

Slate Grocery REIT

Slate Grocery REIT (TSX: SGR.UN) is a grocery REIT with a portfolio of 116 properties located in the United States. Its unit price fell 8% in the December correction. Unlike CT REIT, Slate Grocery REIT has a diversified tenant base, with its biggest tenants, Walmart and Kroger, occupying over 18% of Slate Grocery’s leased property.

The grocery segment commands a lower rent than the average retail space as it is a volume-based business. However, grocery tenants are sticky and resilient to the economic crisis, which means Slate Grocery REIT could keep paying distributions for years to come. The strengthening of the U.S. dollar could benefit Slate Grocery unitholders as the REIT pays distributions in U.S. dollars, which are then converted into Canadian dollars.

Slate Grocery’s unit price is trading at a 30% discount to its net asset value of US$13.77 over fears of a slowdown in interest rate cuts by the Fed. Now is a good time to buy the unit and lock in an 8.75% distribution yield.

Investing in real estate stocks

A $500 investment in each of the two stocks could buy you 36 units of CT REIT and 34 units of Slate Grocery REIT. Together, the two stocks can give you an annual passive income of $75.9 on a $1,000 investment. Moreover, there is a higher probability of 15-20% capital appreciation as property value recovers.