You don’t need to be a millionaire to collect monthly passive income from real estate investments. In fact, investing in real estate is more accessible than ever when you buy a publicly traded real estate investment trust (REIT).
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REITs can be a superior way to invest in real estate
REITs are attractive investments for a few reasons. Firstly, REITs are completely liquid. You can buy and sell them with the touch of a button. You can buy as many shares as you wish. It is the same as buying a stock, so purchase/sale expenses are minimal.
Secondly, REITs are a very efficient way to invest in real estate. No need for a realtor, a lawyer, or specialty consultants. You don’t need to pay property taxes, condo fees, or property insurance. The REIT entity itself does that for you.
Thirdly, REITs require zero management or maintenance. When you own a REIT, you get a stake in the REITs management platform (often almost for free), but have no personal management. You just complete your due diligence, buy your stock, and then collect the monthly distributions that a REIT pays.
Lastly, many REITs are very cheap today. You can buy high-quality assets at significant discounts to their private market value. While you wait for that value to be realized, you get to collect a steady stream of passive income.
If you want to be a real estate investor, but in the easiest way, REITs are an amazing place to collect passive income. If you are wondering how to invest in REITs, here are three solid stocks to buy right now.
A grocery-anchored real estate stock for passive income
First Capital REIT (TSX: FCR.UN) operates a large portfolio of urban-focused retail properties across Canada. In many cases, these are some of the best-located retail spots in Canada.
First Capital is anchored by essential goods providers (like grocery stores, dollar stores, banks, and medical clinics/offices). It has consistently high occupancy, long-term leases, and attractive rental rate growth across its portfolio.
First Capital has a large portfolio of development opportunities that the market hardly values in the stock price. With a major housing shortage in Canada, these assets could be very valuable in the future. While you wait, collect passive income from First Capital’s over 5% distribution yield.
Passive income from a U.S. residential company
Another REIT worth buying now for monthly passive income is BSR REIT (TSX: HOM.UN). This is a good stock if you want geographic diversification. All its residential communities are located in the United States.
BSR is located in the U.S. Sun Belt, where its core regions are experiencing country-leading economic and population growth. BSR traded at a significant value to its private market value. However, a recent large asset sale has realized considerable hidden value.
Today, the REIT is deploying its spare capital to high-grade its residential portfolio. BSR stock yields 4.25% right now. This passive-income stock has a nice mix of growth, income, and value.
This REIT has a huge long-term tailwind
Another stock worth adding for passive income is Chartwell Retirement Residences (TSX: CSH.UN). It is one of the largest operators of senior-lifestyle communities in Canada.
While COVID-19 was a difficult period for this company, its stock has steadily rebounded as demand for senior housing continues to rise. Occupancy has been increasing quarter over quarter. That is having a positive effect on the REIT’s earnings results.
Given the high expected long-term demand for senior housing, Chartwell is a safe place to invest for the long run. It pays a 3.4% distribution yield today. It is a great stock for monthly passive income and steady growth ahead.
