REIT or brick and mortar.

[wazup]

Have put off my retirement planning for too long, here's my dilemma. Could buy a 4 plex but I absolutely despise tenants, which is why I would use a property manager this time. Or do I buy a REIT, the one I'm looking at has an 8% monthly div., throw on top maybe a 5% growth return, overall a pretty good return.

The 4 plex would only cost me 10% for the down payment with the idea of the tenants paying the rest. The REIT, I could probably get 150K by the summer, get 1000 a month divvy to be used as a DRIP, and could probably put 1500 a month of my own money in, key being own money. I would be spending my own money for the REIT but avoiding the hassle of tenants.

What's better long term, 10 years plus. 4plex would be paid off in approx. 15 years, worth 600k or so, not in Tronna.

Anyone know anything about Sentry, see Dennis Mitchell on BNN, guy knows his shit. http://www.sentry.ca/en/portfolio-team/portfolio-managers.html

 

[George The Curious]

Owning a rental property is a part time job, full for some. You usually get slightly better retutran reits but more work and hassle, even with property manager you'll still have to deal with certain things like insurance and lawyers.

 

[goodguy1977]

Hi there,

The problem with REITS is that I don't think going forward you are going to get a total annual return of 13%, the relationship is negative in terms of correlation with interest rates. You also get the daily ticker versus if you have a physical property you don't have the day to day pricing. (Could be good or bad) But you do use leverage with the physical so if hte market falls it could really hurt.

I think it's a crowded space but wish you the best!

Goodguy

 

[Rockslinger]

I would stick with REIT's. Do you really want to deal face to face with tenants (lowest life form on the planet)? It is also impossible to legally evict the "tenant from hell". Also, do you want to get a phone call at 3:00 AM saying a pipe has burst?

Invest in a REIT that holds commercial (not residential) properties.

 

[babyfinsta]

if u buy the reit, have a look at their payout ratio along with the current dividend %. if they are paying out more than they are taking in, that train ride is gonna stop soon. buy a reit with quality products that arent old that will be capex intense. a good one would be calloway where half thier rent is from walmart.

if u do buy a rental building, i hear tridel has a prop mangement co that helps individual owners. worth the money to save the legal bills.

 

[Rockslinger]

i hear tridel has a prop mangement co that helps individual owners.

What percentage of the rent do they charge for their service? Also, can you still do maintenance and repairs yourself or do you have to pay $100 an hour for tradespeople to fix a toilet?

 

[babyfinsta]

What percentage of the rent do they charge for their service? Also, can you still do maintenance and repairs yourself or do you have to pay $100 an hour for tradespeople to fix a toilet?

a friend of mine had a loft condo in st lawrence market. they charged her one months rent as a fee as i recall. dont know about repairs.

 

[oil&gas]

Stocks in the REIT sector have had a great run in the last couple of years and are mostly
fully priced by now. But I believe price appreciation of REITs in general is modest relative
to the trend of rising housing prices in GTA. As far as I know payout ratio of many REITs
are generally not too far below 100%. But I believe a high payout ratio is common
in the sector since REITs is not as much a capital intensive business as those of other
income stocks in such sector as oil and gas production.

This is not meant to recommend REIT as a more prudent investment than buying
a rental property. I believe there are many factors you have to consider between
the two choices. One thing I'll look into is which of the investment will return my money
sooner. I'd guess it could take as long as 15 to 20 years for a REIT to pay out enough
cash dividend to cover the cost of the investment assuming a sustainable 4--6% yield.
If you can get a multiplex at a bargain price good for you. But you have to be sure
it is in a location where you don't have to worry about vacancy for the long term.

 

[oil&gas]

RBC reveals its 8 favourite REITs for 2013

Darcy Keith
Globe and Mail, 10th Jan 2013



Investors in real estate investment trusts had little to complain about in 2012, with the sector boasting returns of 16 per cent – more than double the broader returns of the TSX.

But after four consecutive years of outperforming, is it time for investors to take profits?

RBC Dominion Securities doesn’t think so. But it also believes investors won’t be treated to quite those heady returns again as earnings growth begins to lighten up. It forecasts total returns from Canadian REITs of 10 per cent this year, with several trusts likely to continue to increase distributions.

Valuations may seem lofty, at about 18 times AFFO (adjusted funds from operations, a key ratio for REITs that measures a real estate company’s available funds generated by operations). That’s only about eight per cent from the all-time high. But RBC analysts, led by Neil Downey and Michael Markidis, contend the valuations aren’t anything to be alarmed about given property values and credit conditions.

That said, RBC warns the operating and acquisition environment is unlikely to get any easier for REITs over the next several years. So it’s important for investors to focus on quality at a reasonable price, putting the onus on them to seek out REITs with the best prospects.

Specifically, Mr. Downey and Mr. Markidis suggest investors seek out names that have have “instutional quality” property portfolios, longer-term track records, a well-defined investment strategy and lower financial leverage and payout ratios.

Among 30 TSX-listed REITs that RBC covers, it likes these eight the best. All have “outperform” ratings:


Allied Properties REIT (Price target $36)

Calloway REIT (Price target $33)

Canadian Apartment Properties REIT (Price target $27)

Canadian REIT (Price target $47)

Dundee REIT (Price target $43)

Granite REIT (Price target $41)

H&R REIT (Price target $27)

Morguard REIT (Price target $20)