Perhaps except for inflation, not much is talked about by everyday Canadians more than real estate. People who own it love to talk about how much more it’s worth today than when they bought it. People who don’t own it lament the fact that prices and interest rates have increased to the point that they have trouble imagining being able to buy it.

Real estate, of course, is a far more complex investment than these conversations would lead you to believe. Beyond the incredible price and availability differences geographically, there are multiple real estate types, according to how it is used. For example, commercial real estate can be light industrial, office, retail, hospitality, or apartments, and the list goes on. The configurations of residential (housing) real estate can be almost as diverse.

Beyond buying a home for our family, many Canadians don’t feel as though they’re able to invest in real estate as an investment. Even though income producing real estate can be a terrific investment and is used by wealthy Canadians for this purpose regularly, it’s not something everyone can buy directly.

" Even though income producing real estate can be a terrific investment and is used by wealthy Canadians for this purpose regularly, it’s not something everyone can buy directly. "

To be a landlord takes a significant set of skills, wealth, and support. Even understanding tenant’s rights and rent control mechanisms would take time and experience. It’s likely not much of that experience would be good.

Although not widely recognized, there are ways ordinary Canadians can invest in income producing real estate too. We can invest alongside wealthier folks by buying units in real estate investment trusts (REITs). There is a multitude of them available, with focus on specific types of properties. The managers of the REITs collect the rents, pay the expenses, arrange the financing for the properties, deal with the maintenance issues, and publicly report their results. As a unitholder, you participate in the good and the bad, but you never have more at risk than you’ve invested.

As of July 2023, there are over 20 REITs to choose from within the TSX index, with a total market cap of over $71 billion. That’s a deep pool of investment opportunities, but if you want to invest further afield, you can find similar vehicles in the US, Europe, and most of the developed world.

How is an investor to know which REIT is the one they should invest in? That’s where you should seek the help of an investment professional who can work with you to help you sort out which one(s) make the most sense for you. It may make sense for you to use a Mutual Fund or Exchange Traded Fund that invests in REITs to diversify your invested capital. Again, this is a conversation you should have with a professional.

Don’t sit on the sidelines wishing you could invest in real estate with the wealthy people. Take the time to learn about REITs. You’ll likely be glad you did.