I can’t think of a better country other than Canada to own real estate. It’s incredibly diversified, resilient, supported by the government, and in my opinion, an extremely safe asset class. Canadian real estate just might be the perfect addition for diversifying your current portfolio.
It’s quite possible you already have assets around the world and there’s a good chance you’ve invested in real estate in your home country.
Let’s cover why you should consider investing in Canada – a great and beautiful country.
Firstly, we believe that Canada offers an extremely safe and diversified economy. Owning real estate here is incredibly tax-efficient, especially for overseas investors.
Secondly, real estate is an asset class that is uncorrelated to the stock market. Owning real estate in this multicultural country is also uncorrelated to real estate markets of other countries, more specifically overseas.
If you consider yourself an international investor, you may currently have a core portion of your portfolio in global real estate. Now more than ever, high net worth individuals are investing significant portions of their assets in real estate.
Just as your stock portfolio may be diversified geographically, with assets in all four corners of the world, it’s important that your real estate portfolio be equally diversified.
So, how does one invest in real estate in Canada?
1. The Public Market
The public market allows you to purchase individual publicly traded real estate investment trusts (REITs). These real estate investment trusts own multiple different buildings & properties in either retail, residential, commercial, etc.
Some are diversified and others are concentrated. However, they both trade on the Toronto Stock Exchange (TSX). They can be bought and sold on a daily basis. They provide a yield which is extremely tax efficient, usually in the 4% to 7% range, and for the most part, they have the same volatility as the stock market.
2. The Private Market
Generally, a better way for high net worth individuals to invest is often through private real estate investment trusts (private REITs).
A private REITs will give you much less volatility in your portfolio, since the units are often only re-evaluated every quarter or every six months. Most private REITs give you a higher yield due to the barriers to entry being a little bit higher.
This type of investment is not for retail investors. It’s typically for accredited high networth investors with minimum purchase sizes in the $250,000 range to start.
Building a diversified portfolio of private REITs from across the country is a phenomenal way to build stable tax efficient income.
3. Limited Partnerships
Alternatively, you could do direct ownership in real estate through limited partnerships (LPs). LPs provide you with the following opportunities:
- Allows you to be a larger shareholder.
- You do not need to worry about a management board handling the operations.
- Allows a bit more control on the outcome of the property. Oftentimes, LPs will have anywhere from 10 to 50 shareholders. It’s a smaller group of shareholders and it’s typically a shorter liquidity time and a longer hold, but the return profiles are generally quite a bit higher. Most of the deals in this space would target a 15 to 20% return on investment on a yearly basis.
4. Private Debt
Finally, if you want to be a bit more conservative with your investments, private debt on real estate could be a good fit. As an alternative to traditional fixed income bonds, term deposits, GICs or even debentures, private debt on Canadian real estate is an incredibly efficient way to stabilize your returns. This asset class has very little volatility and a similar risk profile as most of the debt investments that are accessible to the public.
This type of investment has a very consistent, smooth and stable return. You can expect anywhere from 5% to 9% annually. It is my opinion that private debt should be a staple of investors throughout the world.
I firmly believe that international investors should have some Canadian real estate in their portfolio. We are the go-to experts for high networth individuals who seek to invest in Canada through real estate opportunities. We have consistently ranked in the Top 50 Wealth Advisors in the country ranked by Wealth Professional (Finished Top 10, 3x times in the last 4 years). We’ve helped hundreds of high networth individuals build their custom portfolio with our world class investment solutions.
When it comes to investing in real estate, the Tetrault Wealth Advisory Group along with CG Wealth Management is incredibly diligent and passionate. Our team sources the deals and we do the due diligence to make absolutely sure that our clients have the best possible investments in their portfolio suited to their respective goals and needs.
If you’d like to inquire about how you can get started with Canadian real estate investments, we’d love to hear from you. Book your complimentary strategy call at www.speaktorob.com.