You don't need to buy a house to make money from real estate.

In fact, some of the best-performing property investors in Canada don’t own a single building. Instead, they invest in Real Estate Investment Trusts (REITs) — a hands-off, tax-efficient way to earn passive income from residential towers, retail plazas, logistics warehouses, and more.

But with dozens of Canadian REITs on the market and economic uncertainty on the rise, the question isn’t: "Should I invest in REITs?"

It’s "which ones, and how?"

This guide will walk you through:

• What Canadian REITs are and how they work
• Key pros and cons every investor should know
• Five essential strategies for picking the right REITs
• A curated list of the top 5 Canadian REITs across residential, industrial, retail, and office sectors
• Pro tips to help you build a balanced, resilient REIT portfolio

If you’re looking to turn real estate into reliable, long-term returns — without the headache of tenants or toilets — you’re in the right place.

P.S. — are you a homeowner? REITs aren't the only way to get cash flow from property. Lotly works with a network of 50+ trusted lenders nationwide to find you the best deals on home equity loans and HELOCs. Book a free consultation today to learn more.

P.P.S. — Everything you read here is for educational purposes only and isn’t financial advice. We’re not licensed advisors, and nothing on this blog creates a fiduciary duty between us. Any REIT picks we share come from our own research and opinions, and past performance isn’t a promise of future results. Ultimately, you’re in charge of your own decisions — please do your homework and consider chatting with a qualified financial pro before you invest. We do our best to keep things accurate, but we don’t promise specific outcomes and aren’t liable for any losses or damages.

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A gentle introduction to Canadian REITs

REITs are investment vehicles that allow individuals to invest in real estate without actually owning physical properties. They are a popular form of investment for those who want exposure to the real estate market and its potential for long-term growth and income.

Pros of REITs:

• Diversification: By investing in REITs, you can diversify your investment portfolio without buying and managing physical properties.
• Passive income: Many REITs pay out dividends regularly, providing investors with a steady stream of passive income.
• Liquidity: Unlike owning physical properties, REITs are highly liquid investments. You can easily buy and sell them on the stock market.
• Professional management: With REITs, your money is managed by experienced professionals with knowledge and expertise in the real estate industry.

Cons of REITs:

• Market risk: As with any investment, there is always a level of risk involved. The value of your investment may go up or down depending on market conditions.
• No control over properties: Unlike owning physical properties, REIT investors have no control over the properties they invest in. The REIT's management team makes decisions about the management and leasing of these properties.
• Taxes: While REITs offer tax advantages for investors, they also come with their own tax complexities. Investors may be subject to taxes on dividends received from REITs and potential capital gains taxes when selling shares.
• Fees and expenses: Like any investment fund, REITs come with management fees and other expenses that can eat into your returns.

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How to select a REIT for investment

When choosing a Canadian REIT to invest in, you should consider several key criteria to maximize returns and minimize risks. Here are some essential factors to guide your decision-making process:

1. Asset type and portfolio diversification

Evaluate the type of assets the REIT invests in, such as residential, commercial, retail, or industrial properties. A well-diversified portfolio across different asset types and geographic locations helps reduce risk. For instance, a REIT with both urban office buildings and suburban residential properties may provide stability during market fluctuations.

Pro Tip:

• Look for REITs with diverse property types and geographical locations to minimize risk.
• Consider the economic outlook of the areas where the REIT is invested in, as it can impact occupancy rates and income from rental properties.

2. Financial metrics and performance

Analyze financial indicators like the Funds From Operations (FFO), Adjusted Funds From Operations (AFFO), and net asset value (NAV). These metrics provide insights into a REIT’s profitability and ability to generate stable income. Look for REITs with a history of consistent growth and dividend payouts, such as Canadian Apartment Properties REIT (CAPREIT), which has a strong track record in residential housing.

Pro Tip:

• Consider diversifying your portfolio by investing in a mix of REITs with different asset classes and geographic locations.
• This can help mitigate risk and potentially increase overall returns.

3. Management expertise

The quality of a REIT’s management team plays a crucial role in its success. Research the team’s history, market experience, and decision-making track record. Well-established REITs with experienced management, like RioCan REIT, often outperform their peers over the long term.

Pro Tip:

• Look for REITs with a strong and experienced management team, as they are more likely to make sound investment decisions and navigate through challenging market conditions.
• It is also worth considering the compensation structure of the management team, as their interests should align with those of shareholders.

4. Yield and dividend stability

Assess the yield offered by the REIT and its history of dividend payments. While higher yields can be attractive, overly high yields may indicate potential risks. Focus on REITs with sustainable payout ratios to ensure consistent income. For example, Granite REIT provides a balanced yield with a reliable history of payments.

Pro Tip:

• Look at the occupancy rates and lease duration of the properties in the REIT’s portfolio.
• Higher occupancy rates and long-term lease agreements signal stability and steady cash flow.

5. Market trends and growth potential

Research trends affecting the real estate sector in Canada, such as urbanization, e-commerce growth, or interest rate changes. Invest in REITs with exposure to growing markets, like industrial REITs, benefiting from increased demand for warehouse spaces.

Pro Tip:

• Conduct thorough research on the market trends and growth potential of different types of real estate, such as residential, commercial, and industrial.
• Keep an eye on macroeconomic factors that can affect the performance of REITs, such as interest rates and economic downturns.
• Consider investing in specialized REITs such as healthcare or senior living facilities if you believe these sectors will experience strong growth in the future.

By combining these criteria with thorough research and a clear understanding of your investment goals, you can make informed decisions and select Canadian REITs that align with your financial objectives.

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5 best Canadian REITs to invest in

Here’s a comprehensive review of the top Canadian REITs, including dividend yields, performance, management, and portfolio focus. This selection balances yield, stability, and sector diversification.

1. Canadian Apartment Properties REIT (CAPREIT) – CAR.UN

Dividend Yield: ~3.2%–3.75%

1, 3, 5-Year Performance:

• 1-year: Stable, with moderate growth
• 3-year: Consistent dividend increases, resilient through market cycles
• 5-year: Outperformed many peers in the residential segment

Management:

• President & CEO: Mark Kenney
• Largest publicly traded apartment landlord in Canada

Portfolio:

• ~47,000–67,000 residential suites and townhomes across Canada, the Netherlands, and Ireland
• Focus: Apartments, townhomes, manufactured housing, and student housing

Why Invest:

• Largest and most diversified residential REIT in Canada
• 10+ years of dividend increases
• High occupancy rates (~98%) and strong urban market exposure
• Resilient to economic downturns due to essential housing demand

Pro Tip:

• CAPREIT’s scale and diversification make it a core holding for stability and moderate growth.

2. SmartCentres REIT – SRU.UN

Dividend Yield: ~5.44%–7.24%

1, 3, 5-Year Performance:

• 1-year: Recovered well post-pandemic
• 3-year: Maintained dividends through economic shocks
• 5-year: Steady, with a focus on retail and mixed-use expansion

Management:

• One of Canada’s largest fully integrated REITs
• Strong, experienced leadership team

Portfolio:

• 168–195 properties, $10–$11.9 billion in assets
• 34.2 million sq. ft. of retail space, 3,500 acres of land
• Anchored by Walmart (73% of properties), expanding into mixed-use developments

Why Invest:

• High occupancy (97%–99%)
• Did not cut dividends during crises
• Diversifying into residential and commercial mixed-use for future growth

Pro Tip:

• The Walmart anchor provides exceptional tenant stability and foot traffic, supporting long-term income.

3. Dream Industrial REIT – DIR.UN

Dividend Yield: ~4.5%

1, 3, 5-Year Performance:

• 1-year: Strong, driven by e-commerce and logistics demand
• 3-year: Outperformed many peers in the industrial segment
• 5-year: Consistent growth, benefiting from supply chain shifts

Management:

• Managed by Dream Unlimited Corp.
• Over 200 professionals across 13 offices globally

Portfolio:

• 335 industrial assets (542 buildings), 71.8 million sq. ft.
• Properties in Canada, US, and Europe
• Focus: Logistics, distribution, urban industrial, temperature-controlled, and redevelopment

Why Invest:

• Well-positioned for e-commerce and supply chain growth
• Diversified across North America and Europe
• Active management and sustainability initiatives

Pro Tip:

• Industrial REITs like Dream benefit from long-term leases and rising demand for logistics space.

4. Allied Properties REIT – AP.UN

Dividend Yield: 3.1%–10.52% (varies by source; recent yields are closer to 3–4%)

1, 3, 5-Year Performance:

• 1-year: Challenged by office sector headwinds, but stable
• 3-year: Maintained or increased dividends, even during the pandemic
• 5-year: Focused on urban office recovery and data centers

Management:

• Open-end REIT, experienced leadership
• Portfolio valued at ~$8.3–$9.3 billion

Portfolio:

• 195 office and data properties in major cities (Toronto, Montreal, Vancouver)
• 14.2 million sq. ft. of leasable area
• Focus: Urban office, data centers, tech-related real estate

Why Invest:

• High-quality urban office assets
• Strong tenant base, no single tenant over 4.5% of revenue
• ESG leadership and sustainability focus

Pro Tip:

• Allied is a recovery play as office demand rebounds, with a strong track record of dividend stability.

5. Granite REIT – GRT.UN

Dividend Yield: ~4%

1, 3, 5-Year Performance:

• 1-year: Strong, driven by industrial/logistics demand
• 3-year: Consistent outperformance in the industrial sector
• 5-year: Reliable growth and income

Management:

• Managed by an experienced team with a focus on industrial real estate

Portfolio:

• Specializes in industrial properties: warehouses, logistics centers
• Properties in Canada, US, and Europe
• Major tenants include Magna International and other blue-chip companies

Why Invest:

• Industrial/logistics sector is in high demand
• Long-term leases with stable tenants
• Diversified across geographies

Pro Tip:

• Granite’s focus on logistics and e-commerce tenants positions it for continued growth.

Comparison table of dividend yields & focus

Summary

• Residential: CAPREIT offers stability and growth from essential housing.
• Retail/Mixed-Use: SmartCentres provides high yield and tenant security.
• Industrial: Dream Industrial and Granite REIT are positioned for e-commerce and logistics growth.
• Office/Data: Allied Properties is a recovery play with a strong urban focus.

Pro Tip: For a balanced REIT portfolio, consider holding across these sectors to diversify risk and capture growth from different parts of the real estate market.

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Turn your own property into cash flow with Lotly

Let's recap:

• Canadian REITs let you earn passive income from real estate—without owning property. They offer diversification, liquidity, and professional management, but come with risks like market volatility and limited control.
• Choose REITs by evaluating asset type, financial strength, yield stability, and management expertise. For example, CAPREIT excels in residential stability, while Dream Industrial and Granite REIT thrive on logistics and e-commerce demand.
• Build a resilient REIT portfolio by diversifying across sectors like residential, retail, industrial, and office. This strategy balances risk and return while aligning with market trends and long-term growth opportunities.

If you need more immediate cash flow from your investments, a home equity loan may be the way to go. HELS use your house as collateral and can be a great way to access funds when you need them. Carefully consider your options and ensure you can comfortably afford the loan payments before taking on this type of debt.

Lotly can help with that — we work with over 50 trusted lenders across Canada to ensure you get the best possible deal for your financial goals. Book a free consultation to learn more today.

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Frequently Asked Questions

How do I invest in REITs?

There are several ways to invest in REITs, including publicly traded shares on stock exchanges, mutual funds or exchange-traded funds (ETFs) holding REIT stocks, or directly investing in private REIT offerings. Research and understand the specific REIT you're interested in investing in and any associated fees and risks.

What are the benefits of investing in REITs?

Some potential benefits of investing in REITs include regular dividend income, diversification of your investment portfolio, and potentially higher returns than other investments like bonds or savings accounts. Additionally, REITs can provide exposure to different real estate sectors such as commercial properties, residential properties, or even infrastructure projects.

Are there any downsides to investing in REITs?

As with any investment, there are some potential downsides to consider when investing in REITs. These may include fluctuation of share prices based on market conditions and interest rates, potential management or operational issues with the underlying properties, and potential taxation implications. Carefully research and consider these factors before investing in REITs.

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