After much investigating, I have taken a bit of my savings and have made my first investment in a Canadian Real Estate Investment Trust.

I’ve read a lot of information online and certainly feel REIT’s are a good investment.  For me, it’s important  that the REIT’s investment strategy suits what I feel I would put my money into if I wanted to do all the work that’s involved in real  estate.

What did I look for?  Well, I believe that apartment residential is the way to go in real estate.  Multi-family dwellings perform very  well during most economic cycles including recessions and growth periods.  When times are good, people move out of their family’s home  or their friend’s apartment and get their own apartment.  When times are tough, many home owners turn to renting.

Adding in a small mix of commercial real estate doesn’t hurt the REIT either.  Commercial real estate has a history of having a higher  vacancy rate, but the REIT I purchased into only has a small percentage of commercial investments compared to apartment residential.

When I was looking into possibly buying real estate as an investment about a year ago, my agent sent me listings in many different  cities.  The listings included the income and expenses of each property.  After investigating each property and popping the numbers into  a nice little cap rate and profit/expense spreadsheet I created, I found out something interesting:  I could buy a 4-plex in Orangeville  for $450,000 and earn the same monthly cash flow as a $1.2 million single-family residence here in Toronto.

I went even further and found a triplex in St. Catharines that would make almost as much as that $450,000 Orangeville home but for only  $320,000.  So I asked myself … why would I want to buy a $1.2 million home in Toronto when I could buy 3 properties in St. Catharines  or 2 in Orangeville for less and make double or triple the cash flow for the same price or less?

But alas I didn’t buy any because as I’ve mentioned before, I’m lazy.  Instead, I invested my money into the Skyline REIT.  Skyline’s  founders realized that by investing in smaller cities in Ontario and other provinces, they could stretch their dollars further and buy  more real estate and in turn increase cash flow. Their portfolio includes 80% apartment residential and 20% commercial real estate.   Their portfolio is currently worth over $500 million and consists of 89 apartment buildings and over 780,000 sq. feet of commercial  space.  They are the 14th largest landlord in Canada.  Not bad considering the REIT started in 2006.

So I’ve taken $25,000 as the minimum investment that you can put into the REIT and made $187.50 this month from distributions.  I opted  for the “DRIP” program (see my REIT article for more information) so the money is reinvested back into the initial investment.  At any  given time I can opt out of the DRIP program and they will start depositing my monthly income directly into my bank account for me.  I  could’ve asked for cheques instead but I love the environment too much to cut down a tree just to receive some money.

Not the most amount of money in the world but I have to start somewhere, right? And I certainly don’t have to do any work for that extra $187.50.  Well other than fill out some paperwork.

Stay tuned, later this week or early next week I’m going to be buying some dividend producing stocks.