Real Estate Investment Trusts, or REITs, are known to deliver reliable monthly Canadian investment cash distributions, some tax deferral, preservation of Capital, and growth in cash distributions and capital over time that helps avoid the volatility of the stock market.
Successful REITs (that is, trusts help their investors become successful) typically own and manage a variety of properties in various locations across Canada. This diversification allows the portfolio to thrive even when some property markets may present challenging conditions. Another competency that every REIT should display is management ability, not only to forecast and take advantage of market conditions, but also to add value to the properties that make up the portfolio, in order to attract and retain tenants year after year, and also achieve premium rents.
Some REIT managers focus on specific niches, such as the apartment market. Apartments are often considered to be a “basic need” and are therefore somewhat sheltered from the performance of the economy. Although apartments and other REIT investments are said to offer slow growth, it is also steady growth that lasts over time – investors don’t need to worry about scrambling to find the next opportunity month after month.
As an added bonus, REIT unit holders often enjoy distributions that are considered to be very tax-efficient when compared to traditional investment vehicles. Because of capital depreciation, taxes on distributions can usually be deferred for income tax purposes.
Investing in a REIT allows investors to diversify, and also saves time. REITs also offer an experienced management team, allow investors to leverage economies of scale provided by a diversified portfolio of properties. As well, these investments are liquid – disbursements are made monthly, and this cash can be pocketed by the investor or invested back into the REIT.
Canadian REITs can offer real estate investment Canada participants flexible investment options that can help enhance investment stability, cash flow and profitability.