A Real Estate Investment Trust (REIT) is a real estate company that owns and/or operates income-producing properties such as malls, hotels, apartments, and office buildings. REITs distribute most, if not all, of the net income they receive to their unit holders.
Real estate investment trusts (REITs) are companies that own, operate, or finance income-generating real estate. They let investors earn rental income and property value appreciation without owning physical properties. REITs trade on stock exchanges like stocks, offering liquidity, diversification, and potential dividends.
That makes REITs an attractive investment for yield-hungry investors, especially in a low-interest-rate environment where high-interest savings accounts, GICs, and bond yields pay next to nothing. It’s a great way of growing your portfolio without taking big risks.
How to invest in REITs in Canada
Step 1. If you don't have one already, sign up for one of the best trading platforms in Canada. Below are a couple of our favourites. You'll need your government ID, social insurance number, and some employment and income details.
| CIBC Investor's Edge review | Questrade review | Wealthsimple review |
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◦ In-depth research to boost your investment knowledge.
◦ Investment options for every investor, no matter what your financial goals are. ◦ Under 25? Trade for free. |
◦ Buy any North American-listed ETF, including crypto ETFs, commission-free.
◦ No maximum on the amount of free ETFs you can buy. ◦ Free to transfer your account |
◦ No account minimums.
◦ $0 commission ETF trading ◦ Reinvest dividends automatically |
| CIBC Investor's Edge | Questrade | Wealthsimple |
| Go to CIBC Investor's Edge | Go to Questrade | Go to Wealthsimple |
Step 2. Fund your account. Transfer money into your brokerage account from your bank account.
Step 3. Research REITs. Look for publicly traded REITs on the TSC or consider REIT ETFs for diversification. We outline some top REIT picks below.
Step 4. Place an order. Enter the REIT’s ticker symbol, choose the number of shares, and select a market or limit order.
Step 5. Monitor & Manage. Track performance and reinvest dividends for growth.
Note: You can also invest in private REITs through investment firms, but they may have higher minimums and less liquidity.
Canadian real estate investment trusts (REITs) own and manage income-generating properties like apartments, offices, and malls. They earn rental income and must distribute at least 90% of taxable earnings to investors as dividends. Traded on the TSX, they offer liquidity, diversification, and potential for capital appreciation.
Pros and cons of REITs
Pros
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Passive Income – Regular dividend payouts from rental income.
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Diversification – Exposure to real estate without owning property.
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Liquidity – Traded on stock exchanges like stocks.
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Lower Capital Requirement – Invest with less money than buying property.
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Professional Management – Experts handle property selection and maintenance.
Cons
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Taxable Ddvidends – REIT payouts are taxed as income, not capital gains.
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Market volatility – Prices fluctuate like stocks.
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Interest rate sensitivity – Higher rates can lower REIT values.
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Limited growth – Since they pay out most earnings, reinvestment is restricted.
REITs are low cost
Homeownership in Canada is becoming increasingly unaffordable. It can take years to save for a down payment, and even then, the rise in real estate prices may move at a faster pace than savings.
On the other hand, investors can purchase a single unit of a REIT for as little as $10.
REITs are low maintenance
Owning a rental property comes with headaches, like negotiating with tenants, managing and maintaining the property.
Owning units in a REIT or REIT ETF gives you all the benefits of being a landlord (income and capital appreciation) without any of the hassles.
REITs are easy to sell
The single biggest problem with owning an individual property is the lack of liquidity. Selling a home can be expensive and time-consuming.
Selling a REIT, however, is as simple as clicking the sell button on your trading platform. Since REITs trade on public stock exchanges, they avoid the lack of liquidity that plagues the private real estate market.
REITS offer diversification in my portfolio
Individual REITs hold multiple properties across the country, never relying solely on one city or region.
REIT ETFs hold multiple REITs, diversifying further across different real estate sectors like commercial and residential. Owning a home is a concentrated bet on real estate in one particular city and even on one particular street.
I don't like the extra taxes (potentially)
Holding REITs inside your registered accounts (RRSP or TFSA) works out just fine because the distributions are sheltered from tax.
But holding REITs inside a non-registered account can be problematic because the distributions are taxed at your full marginal rate.
That’s right: unlike dividends from Canadian companies, distributions from REITs don’t enjoy favourable tax treatment. That’s because the REIT flowed the income directly to you without paying tax.
I don't like the lack of leverage
The use of leverage is a big draw for real estate investors because you only have to put down 20% of the purchase price when you buy a rental property (and just 5% if it’s your primary residence).
REIT investors don’t have the same advantage because most online brokers will only allow you to use 2:1 leverage to buy securities. Leverage cuts both ways if prices rise or fall, but in general, its use has allowed real estate investors to enjoy generous gains.
Investing in REITs in Canada
You can invest in real estate investment trusts (REITs) in two ways: by buying individual REIT stocks or investing in REIT ETFs. Both options offer exposure to income-generating real estate, but they come with different benefits and trade-offs.
Buying REIT Stocks
Investing directly in individual REIT stocks lets you build a custom portfolio while avoiding ETF management fees. You get full control over your holdings, the ability to target specific sectors—like apartments, industrial, or retail—and the potential for higher dividend yields. You can buy these REITs through a discount brokerage like Questrade or Wealthsimple, which offers zero-commission trading and will even cover up to $150 in transfer fees on accounts over $5,000.
Buying REIT ETFs
REIT ETFs offer instant diversification by bundling multiple REITs into a single investment. However, they charge a management expense ratio (MER), which can eat into returns. A smart DIY approach is to “skim” the top 10 holdings of a REIT ETF and buy those individual stocks instead, reducing fees while keeping diversification.
While ETFs provide convenience, individual REITs let you tailor your portfolio. Choose what fits your strategy, then explore the top REIT stocks or top REIT ETFs below.
Why I invest in REIT ETFs (and you should, too)
Broadening your real estate exposure is why investing in REIT ETFs makes more sense than holding individual REITs. It’s more efficient and diversified for investors to hold one ETF representing the entire real estate market. Consider the management fee your cost for that diversification and simplicity.
REIT investors can also use ETFs to get exposure to foreign real estate. For instance, Vanguard’s VNQ and iShares’ IYR trade on US stock exchanges and hold specialized, commercial and residential real estate in the U.S.
VNQ holds 174 individual stocks and REITs and comes with a management fee of just 0.12%. IYR has 82 holdings and comes with a management fee of 0.42%.
If you’re going to choose a REIT ETF, then go big and broad. Keep your costs low and diversify beyond Canada’s borders.
Related read: How to buy stocks in Canada
So, are REITs a good investment?
Yes, as of 2025, REITs continue to be a strong investment choice. Historically, over periods of 20 to 50 years, REITs have outperformed stocks, bonds, and commodities.
Here are reasons why REITs are a good investment:
- REITs offer diversification. REITs tend to own a wide variety of properties across the country, whereas most homeowners have their real estate exposure concentrated in a single property in one market.
- REITs also tend to pay healthy distributions. They offer a way for investors to juice their fixed-income returns, particularly in a low-interest-rate environment.
- Keeps up with inflation. Real estate values and rental income tend to rise with inflation, helping REITs maintain and even grow investor returns. Many commercial leases include inflation-linked rent increases, ensuring that REITs generate more revenue as the cost of living rises. Additionally, inflation pushes up property values, benefiting REITs with strong real estate portfolios. Since REITs are required to distribute most of their earnings as dividends, rising rental income often leads to higher payouts for investors. While high interest rates can temporarily pressure REIT stock prices, real estate’s long-term ability to track inflation makes REITs a reliable hedge against rising costs.
- Favourable during periods of higher inflation and rising interest rates. That’s because a strong economy can lead to higher occupancy rates and higher rent payments for real estate owners.
REIT Investing vs. direct investment in real estate
Canadians love homeownership, especially in hot markets like Toronto and Vancouver. But outside these cities, direct real estate investing hasn’t always outperformed REITs. Owning a single property is a highly concentrated, leveraged bet, while REITs offer diversification across multiple properties and sectors.
Real estate returns come from rental income and property appreciation—but if you live in your home, you’re missing out on half of that potential.
A new alternative? Crowdsourced real estate platforms like Addy Invest, which let you own fractional shares of properties without the hassle of being a landlord. Whether you choose REITs, direct ownership, or fractional investing, diversification is key.
FAQs
Robb Engen is a leading expert in the personal finance realm of Canada and is also the co-founder of Boomer & Echo, an award-winning personal finance blog.
Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.
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