Passive landlording a lucrative, if risky, venture

By its very nature, real estate investment is a complicated affair, as a portfolio holder has to remain on top of the maintenance, mortgages, tenants, and other aspects of the business. However, an industry analyst recently pointed at an alternative that might provide great yields—albeit at greatly increased risk.
 
In a breakdown piece for The Motley Fool, industry observer Kay Ng suggested investing in real estate investment trusts (REITs) as a way for would-be market participants to collect passive rent.
 
“REITs collect rent from the many properties they own and manage, and they pay out most of that cash flow as distributions to unitholders. So, you can conveniently be anywhere in the world and collect juicy paycheques from your REIT holdings every month,” Ng wrote.
 
Ng cited providers such as Dream Industrial Real Estate Invest Trust and Northview Apartment REIT that can lead to yields as high as 8 per cent.
 
REITs can also provide tax-free income on a monthly basis, as these trusts are considered a different category from dividends.
 
“Investors may also be interested to know that in non-registered accounts, the return-of-capital portion of REIT distributions is tax deferred until unitholders sell or adjusted cost basis turns negative,” Ng said.
 
This is where the risk factor comes in, as the tax-free character is most attractive for enterprising individuals who wish to make bank quickly and reliably in this sector. Thus, current investors may face harshly intensified competition in an arena which promises arguably the best possible returns, dollar for dollar.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Heyden, South Rustico, Tourville, George's Brook, Sypher Cove

COMMENTS

Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address

Poll

Have your investment plans changed for 2017?