A to-do list for RRSP real estate investors

To the growing number of Canadians now ready to take their RRSP investments into the real estate market, wait just one minute, says Brian Pulis, president of Pulis Investment Group. In fact, wait five, and read each of his top five considerations for Canadians interested in those alternatives to mutual funds and stocks.

1.    Gauge your appetite:  Investors need to determine exactly what their appetite for risk is, says Pulis. Some RRSP-eligible real estate investments carry considerably more uncertainty than others. More-jittery investors should stick closer to lending first mortgages than seconds, for example.

2.    Cover the basics: This is new stuff for most Canadians sitting on RRSPs, and they need to identify all the investment opportunities open to them – from mortgages and real estate investment trusts to limited partnerships of all stripes.

3.    Know the time of day: Knowing how long "the long haul" really is of primary consideration for investors. As mortgage lenders they often work with terms as brief as 12 months, while many others loans will require investors to wait two or more years for it to be paid back. Limited partnership terms run even longer on average, usually with a five-year minimum, says Pulis.

4.    Pin down your payday: Although some investments pay dividends quarterly or annually rather than asking the investor to wait until the end of the term, many others pay out only at the very end. Note: investors are often rewarded with a bigger payday for their patience, says Pulis, because that allows for the constant reinvestment of profits.

5.    Do your duty: Know exactly who or what you’re investing in, says Pulis. Everyone has an electronic paper trail, an online track record for would-be partners to follow and to do their due diligence.

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