Right now simply does not seem like a great time to get into real estate. The housing crisis continues throughout Canada, with home sales dropping across the country. Then there’s the stock market, and, as we’ve seen, the TSX today is not something any one is glad to be a part of right now. Bring in inflation and rising interest rates that, in turn, affect mortgage rates, and you’ve got a poor scenario for real estate investment.
But what if it’s not all bad?
What if I told you that not only is it possible to get into real estate, but it’s actually an excellent time to do so? Further, what if I said that you can start right now at no cost to you? I’m not making this up. You can absolutely do this in pretty much any scenario.
To complete my three real estate investing hacks, there is a beginning, middle, and end scenario. All of it starts off costing you exactly $0. So, let’s start with the first step to get into real estate investing.
Get into storage
Storage is boring, sure, but it’s incredibly lucrative right now. The average cost to rent a storage unit in Canada is around $200 per month, depending on where you are in Canada. And right now, storage is needed by so many businesses. The growth in e-commerce has led to a supply demand for many products, yet people have nowhere to put those products.
If you do your research and find the average cost in your town, getting into storage means you can offer a more competitive cost. Does this mean you need to buy a storage unit? Absolutely not. Instead, use what you already have. That could be a storage unit in your rented apartment building. It could mean your garage or attic. All you’ll need is to keep a paper trail and sign an agreement to keep their items safe, and their payments coming in. Then you’ve turned a $0 investment into $200 per month in income!
Next, put it to work
Next up, let’s put that passive income to work. If you’re getting about $200 per month, that’s $2,400 per year that you can then invest. And again, it might not seem like it right now, but it’s a great time to get into the TSX today. With shares down, you can find long-term real estate to invest in.
Sticking to the storage theme, I would consider a company like Dream Industrial REIT (TSX:DIR.UN). This company also provides storage and assembly lines through its industrial properties. And that’s only increasing with the growth in e-commerce. The REIT offers a dividend yield of 5.37% as of writing, so you can bring in another $140 each year in passive income from the stock.
Put it all together
The third step is to couple those investments together to create a strong passive-income portfolio all from real estate — one so strong that in a few decades, you could even use it to buy a real estate property of your own!
In this scenario, let’s say you have $2,400 each year for the next few decades. You invest it in Dream REIT and reinvest dividends as well. Then we’ll assume its historical performance continues for the next few decades.
In this scenario, if you were to see the exact same performance not even increase your rental property agreement, it would take you 40 years to reach $460,600. That could be enough to buy your own real estate property! Or, at the very least, it could leave you with a massive amount of funds.