At Canadian Investment Services, we aim to inform and educate our clients about the best and most rewarding investment opportunities available. After all, CIS = EIS, remember? In-keeping with this philosophy, this article is devoted to broadening your access to an amazing investment opportunity that has been kept a well-guarded secret – until now.


Real Estate Income Trusts (REITs) are incredible investment options that most people have never about before. Why? Because when you strike gold, you tend to keep it to yourself. Not us though, because investment success for you means business success for us.


What are Real Estate Income Trusts (REITs)?

Quite simply, a REIT owns and manages properties. At CIS, we primarilry work with REITs that focus on multi-unit residential properties. These REITs therefore hold a portfolio of rental properties that generate rental income, usually apartment buildings. 


How does it work?

Our partner companies, Pulis Investments and Centurion Asset Management Inc., strategically purchase undervalued real estate (apartment and townhome properties) in up-and-coming markets and renovate these properties in order to increase rental income. 


Real estate in these markets is one of the safest and most profitable investment options available. I am sure we are all aware of this as we have watched housing prices and rent steadily skyrocket over the last few decades. The revenue from these properties will then be used to purchase additional properties, and the REIT portfolio continues to grow exponentially through this strategy. 


REITs allow you to enjoy the stability and growth potential of real estate investing without the headaches that come along with owning rental properties yourself. This, along with many other reasons, are why REITs are a fantastic investment option. 


Why it works

In many ways, REITs can provide the ideal balance between investing in public stocks and private real estate, as it is much less risky than stocks but requires much less maintenance and stress than real estate. 


As the REITs we work with are limited partnerships, this allows our investors to further lower their risk: with a limited partnership, an investor’s liability is limited only to the amount they have contributed


Long-term investment

Another important factor to consider when comparing investment options is liquidity. This is one area where real estate can be more limited, and is therefore usually viewed as a longer term investment. 


REITs can provide a significant advantage in this regard, as it is much easier for an investor to sell their units and access their money as they need it. With that being said, REITs should still be seen as a longer-term investment. Often, the initial profits from net rental income are reinvested by the REIT in order to complete further renovations and purchase new properties, which leads to greatly increased unit value in the long run. So, for this reason we usually recommend our clients keep their money invested for at least 3-5 years in order to experience the best possible returns. 


REITs: a breakdown

Investors/unit holders will receive distributions of a portion of the net rental income generated within the trust, based on the number of units purchased. However, as the value of the properties within the trust increases and the mortgages are paid-down, investors will see the value of their units increase as well. 


Therefore, there are 3 potential avenues for generating income/value within REITs: 

  1. Net rental income
  2. Increase in property value
  3. Mortgage pay-down


In addition, REITs will also pay out distributions to their investors as a “return of capital”. Now, here’s the great part: return of capital distributions are considered a non-taxable income for the investor


That’s right, non-taxable. 


A prudent investment choice

Overall, REITs are a very prudent and tax efficient investment. During the initial stages of the investment, it is not uncommon for REITs to be experiencing a net loss (total rent – total expenses) as they use the rent money to purchase and renovate additional properties. While this can limit distributions to investors initially, in reality it is greatly increasing the value of each unit the investor owns, and allows them to see much better returns in the long-run. 


Think of it like a normal real estate renovation investment: initially you spend money to buy/redo a property, which allows you to sell it for a huge return on your investment in a few years. In addition, investors continue to receive a return of capital each year, so even when the trust is actually experiencing a loss, investors can still enjoy positive cash flow from the distributions they receive. It’s a no-brainer.



In truth, REITs are a low risk and low maintenance investment option that many of our clients have had great success with. If the idea of investing in REITs sounds appealing to you, please get in touch with us at Canadian Investment Services. We will be happy to further educate you on the topic. 


I hope you have found this article both informative and helpful. Please feel free to share it with your friends and family.


Until the next time,


Gerry J. Hogenhout, CPA, CGA, CFP, AMP

Founding Principle, Canadian Investment Services


Get in touch

Are you looking to leverage Real Estate Income Trusts (REITs) as a reliable investment opportunity? To find out more, visit our website to book a free consultation today.