A real-estate investment trust is a company that owns, operates or finances real estate. They offer a way for investors to tap into the market without buying property.Todd Korol/The Globe and Mail
Forty-one per cent of Canadian homeowners say one of their main reasons for purchasing property was because it was an investment opportunity, according to a 2025 study by Canada Mortgage and Housing Corp.
So what does that mean for the increasing number of Canadians who can’t afford to buy a home, but may want to financially benefit from the housing market?
One potential option is to invest in a real estate investment trust, or REIT, which is a company that owns, operates or finances real estate that is meant to generate income. That can include REITs that manage rental units, but there are all sorts of REITs that manage everything from retail plazas to data centres for tech companies.
Certified financial planners say REITs offer the potential to tap into Canada’s real estate market, but there are some key differences between the gains that you could see out of a physical home versus a stock.
Why smart money is targeting cheap Canadian apartment REITs
Luka Marjanovic, managing director of Canadian Imperial Bank of Commerce’s trading platform Investor’s Edge, said one thing that residential REITs do a good job of emulating is investing in property that you intend to rent out as landlord.
“You’re participating in a pool of people doing that, rather than holding a home,” said Mr. Marjanovic, who said platforms such as Investor’s Edge can help people understand REIT strategies and which ETFs or stocks have portfolios that suit them.
He said some of the benefits of REITs are that they’re more diversified than a single home, since a company or exchange traded fund will often be invested in multiple real estate properties across Canada or around the world.
REITs are also much more liquid than a home. You can easily sell a portion or all of your position any time.
Jason Heath, managing director of Objective Financial Partners in Toronto, said he has recommended investing in REITs instead of an investment property to clients before. REIT investors don’t carry the responsibilities that come with being a landlord and they can disperse some of the risk involved.
“If somebody is deciding whether or not to buy a rental property, I would always challenge them about whether they’re better off owning something like a REIT,” Mr. Heath said.
But experts cautioned that investors shouldn’t be prompted by the fear of missing out on the housing market’s gains, especially given that the massive gain in housing prices over the past two decades was unusual and isn’t bound to happen again.
The downsides are that you can’t leverage an REIT investment the same way that you can on a house, where a 5-per-cent down payment allows you to own a much more valuable asset.
REIT values can also be particularly sensitive to interest-rate policy – more so than home prices.
“REITs are very different from real estate because they trade like stocks and they react immediately to things like interest rates and inflation and market downturns,” Mr. Heath said.
When interest rates rose rapidly in 2022, Mr. Heath said REITs suffered immediate losses, even though home prices continued to rise for some time.
In 2023, it was the opposite. Home prices started to go down and REITs rebounded immediately when interest rates came down.
“They’re not a perfect proxy for real estate where you live,” Mr. Heath said.
Evan Parubets, head of the advisory services team at Steadyhand Investments, argued that a portfolio shouldn’t be adjusted on the basis of whether you own a home or not. Instead, it should be guided by investment objectives such as retirement.
“A primary residence should never have been considered an investment asset – it’s a place to live,” Mr. Parubets said.
He said investing in certain sectors rarely helps achieve a specific goal. Instead, focusing on disciplined savings into broad-based equities is a better long-term plan – especially since renters likely have lower expenses and better cashflow than homeowners.
On the other hand, Mr. Heath said there is a case to be made for a non-homeowner to be more exposed to REITs than a homeowner, since so much of a homeowner’s net worth will already be tied up in real estate.
“But REITs aren’t a magical way to make money or insulate yourself from stock market volatility,” Mr. Heath said.
