3 Real Estate Investment Ideas, If You Can't Afford a House
Friday Apr 22nd, 2016
3 REAL ESTATE INVESTMENT IDEAS, IF YOU CAN'T AFFORD A HOUSE
The housing markets in Toronto and Vancouver continue to sizzle, but you don't have to buy a house to make money in Canada's real estate sector. Many of Canada's REITs continue to offer good value to investors, says Andrew Moffs, Senior Vice President at Vision Capital.
A detached house in Toronto now sells for about $1.2-million, putting the dream of home ownership out of reach for many millennials, says Moffs. But that's good news for companies in the rental space, he says.
"The want to walk to work, they want to walk to Starbucks, they don't necessarily want to buy a house. That's really good for the apartment REITs."
Here are three REITs Moffs likes, and one to avoid.
Canadian Apartment REIT (CAR_u.TO)
Units of Canada's largest landlord are a popular choice with investors. Shares of the company are up only 2.4% this year. But the company is still trading at a discount to its Net Asset Value, says Moffs.
InterRent REIT (IIP_u.TO)
The Ottawa-based REIT owns properties in Ontario and Quebec. It specializes in acquiring underperforming properties, redeveloping them and boosting rents. Earlier this month the company purchased a 400-suite apartment complex in Ottawa for $55-million. Investors are buying the company, as well. Units of InterRent are up more than 13% this year.
Chartwell Retirement Residences (CSH_u.TO)
As Canada's population ages, more and more seniors are moving to assisted-living facilities provided by Chartwell, says Moffs. The senior housing sector has not been appreciated by investors, but that's starting to change, he says. Units of the company are up more than 13% for the year and the company is still trading at a discount to its Net Asset Value.
Avoid the Office
While home prices are being driven by a lack of supply, the same can't be said of the Canadian office sector. Corporate downsizing in the energy sector and millions of square feet in new office space coming on-line is pushing rents lower, says Moffs. "Twenty-years ago, we built office space with 250-square feet per employee; now its 150-square feet."
Dream Office REIT (D_u.TO)
The REIT has big exposure to the Alberta energy market. Units of the company are down more than 25% in the past year. Earlier this year the REIT announced it was cutting its payout and was selling up to $1.2-billion to help it weather the energy sector slowdown.