Volatility continues to wreak havoc on the market. Rising oil prices, surging inflation, and interest rate hikes are collectively adding uncertainty to the market. That volatility exists alongside the still surging real estate market. For investors looking to establish a rental income stream, the current market is anything but welcoming.
Fortunately, there is an alternative. Here’s a look at one option that can provide all the benefits of a landlord without any of the common concerns and risks.
How to generate a rental income stream Prospective investors that are looking for a rental income stream no longer need to worry about getting a mortgage, saving a down payment, or even collecting rent. This is where RioCan Real Estate (TSX:REI.UN) comes into play.
RioCan is one of the largest REITs in Canada. RioCan’s portfolio is still predominately focused on commercial and retail properties, but that focus is changing. In recent years, RioCan has added mixed-use residential properties to its portfolio.
The mixed-use properties, known as RioCan living properties, situates residential units on top of several floors of commercial retail properties. Adding to that diversified appeal is the location of these new properties. They are situated along transit routes within the major metro areas of Canada.
In other words, RioCan living properties are located along high-demand areas where real estate prices are unaffordable to younger, first-time homebuyers.
Thanks to that large and well-diversified portfolio of properties, investors can expect RioCan to provide a healthy, recurring income stream. The dividend currently provides a handsome yield of 3.94% on a monthly cadence.
To put that earnings potential into context, a $30,000 investment in RioCan will provide just shy of $100 each month. If you aren’t ready to draw on that income just yet, reinvesting that income until needed can result in substantial growth over the longer term.
A big advantage worth noting here is that unlike a rental income, your distribution will stem from hundreds of properties. This significantly reduces risk and makes RioCan a well-diversified top pick for any portfolio.
If that weren’t enough, there’s one final reason to note. RioCan continues to invest in new properties to add to its growing portfolio. This means that investors can expect long-term growth and income from their investment.
Final thoughts No investment is without risk. Fortunately, unlike owning a single rental property, RioCan is well diversified across hundreds of properties. There’s also no need to worry about chasing down tenants to pay rent or acquiring a massive down payment.
In other words, investing in RioCan is a great way to diversify your portfolio and establish a rental income stream.
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Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.