Necessity-based real estate investing

Necessity-based real estate means these properties serve a necessary function. Whether it's healthcare facilities, family housing or grocery stores, these types of properties remain in demand regardless of the circumstances. For US investors — and those that file taxes to the IRS — an easy way to get exposure to necessity-based real property investments is through private equity firm, such as First National Realty Partners (FNRP).

With FNRP’s platform, accredited investors can invest in institutional-quality, grocery-anchored real estate investments without the leg work of finding deals on their own.

Since the investments are necessity-based, they tend to perform well during times of economic volatility. Better still, FNRP deals with tenant complaints and maintenance issues. Over the last few years, many investors have earned lucrative returns on their investments through FNRP. Unfortunately, this option is only open to US-based, accredited investors. Still, if you fall into this category of investor, FNRP appears to offer exceptional exposure to necessity-based real estate investing and the process of opening and funding an account is simple and easy.

For the majority of investors — including Canadians — looking for exposure in the real estate market without becoming a landlord, a good option are real estate investment trusts (REITs).

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Investing in REIT is a way to profit from the real estate market without having to buy physical real estate or worry about landlord duties like screening tenants, fixing damages and chasing down late payments.

Most REITs are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. Each REIT will collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments. (By law, REITs must pay out the lion's sum of their earnings as dividend payments to investors — making REITs an ideal investment tool for investors looking for income-producing products.)

Generally, REITs are described as high-return investments that provide solid dividends and the potential for moderate, long-term capital appreciation and relatively safe income-earnings. The best part is that REITs trade like stock — allowing investors to buy and sell shares in REITS, as they would a share of a company. An added benefit is that the purchase and sale of REIT shares is not limited to a pre-set amount — meaning investors aren't bound to invest a minimum threshold, or required to wait a holding period before cashing out.

However, investors should be mindful that not all REITs are publicly-traded. Private REITs are available and, often, trade like publicly-traded REITs but the oversight and regulatory requirements may not be adhered to with private REITs. For that reason, most investors will want to stick to publicly-traded REITS — found through fund managers and brokerage platforms.

Real Estate ETFs

REITs took a bit of a beating during the pandemic constraints, with many businesses forced to shutter the doors on commercial properties as foot-traffic dwindled to nothing. For savvy investors, this didn't mean abandoning real estate investments, it meant shopping for another investment product with real property exposure.

One of the easiest — and cost-effective — options is an exchange-traded fund (ETF) with real estate exposure. Like REITs, investing in ETFs doesn't require an investor to assume landlord responsibilities, and it trades just like a REIT or a stock. In simple terms, an ETF is a diversified portfolio of stocks; a real estate-focused ETF, is a diversified portfolio of stocks that concentrate on real property investments.

You can buy and sell ETFs on major trading exchanges, including the Toronto Stock Exchange (TSX) and the New York Stock Exhange (NYSE). This easy access to trading makes ETFs as convenient to buy and sell as shares in a company — and offers exceptional liquidity particularly to an asset class that isn't known for this attribute. (It's much harder and takes far more time to sell or buy a property than it does to sell or buy a share.)

If you’re interested in getting in the world of ETFs, there are a number of excellent online brokerage accounts, some offered by big banks, such as CIBC and some offered by award-winning fintech firms, such as Wealthsimple and Questrade.

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How to get started in real estate investing

To get started — and tap into real estate revenues — you'll need to open a brokerage account. To keep fees low, start with an online discount brokerage — a trading platform that gives investors the ability to buy and sell a variety of products, including stocks, ETFs, mutual funds as well as options. When you are first building your portfolio, the key is to keep fees low and to find a brokerage that's easy to use and offers education and insight — so you can level up your investing knowledge.

Use your discount brokerage platform to trade, keep an eye on your portfolio and to track potential investments (add them to your watchlist). For investors interested in opening a new discount brokerage account, check out:

  • CIBC Investor's Edge: Build your own portfolio using mobile or desktop research tools including indepth analysis and up-to-the-minute equity quotes. Open registered accounts, such as Tax-Free Savings Account (TFSA), a registered retirement savings plan (RRSP) or other tax-deferred options, as well as non-registered trading accounts. For active traders (more than 150 trades per quarter) pay just $4.95 per trade for ETFs and stocks with no fees charged for money market mutual funds.
  • Wealthsimple: Get $25 welcome bonus, plus free trades when you open and fund your trading account (with $150 or more). Link this trading account with a high-interest chequing account and get 4% interest on all deposits — a great option for parking your investment funds before making a trade.
  • Questrade: New customers get $50 in free trades (a trade commission rebate) after adding $1,000 into their trading account.

Bottom line

Like all asset classes, real estate goes through valleys and peaks. The key is to develop an investment plan and to understand how and when to trade, based on your investment goals. Thing is, you won't get anywhere if you don't start. It's why Grant Cardone is so bullish on the power of investing — whether it's real estate or REITs, the key is to get your money working for you.


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Bethan Moorcraft is a reporter with experience in news editing and business reporting across international markets. Before turning her talents to personal finance, she was the senior editor of Insurance Business, a global insurance industry publication.


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