🍁 FORGET CANADIAN REITs... these 2 REAL ESTATE SERVICE stocks are killing it!

Owning real estate might be the WRONG way to invest… real estate SERVICES make more and have less capital risks!

Most Canadian investors LOVE investing in real estates stocks or REITs to own some of the country’s most PRIME real estate and to receive some nice dividends.

But the longer you’re in the real estate game, you notice a few things that happen all the time. Buying real estate investments at the WRONG PRICE or location in town can be devastating, and there will be operational risks such as tenants being unable to make payments, property maintenance costs over time or real estate projects becoming too expensive or delayed. Not to say that owning real estate is bad or there’s no money to be made, but some of the risks I’ve mentioned have probably been why a lot of REITs on average this past decade have seen relatively stagnant stock price appreciation. In reality, if most REITs didn’t provide their dividends, there would be little to no investment gains since it pretty much made up the bulk of the performance.

Another thing that I noticed is that the companies servicing the real estate industry tends to keep making MORE money every year and are LESS affected by the typical real estate risks. Service companies also have very little capital requirements for operations since they don’t need money to buy properties or materials, and their revenues are highly predictable and recurring because they’re typically set in stone through long-term contracts. So long as people have an increasing need for real estate or are investing in real estate, then there will always be a need for real estate services.

I like to think of the real estate situation like that of the gold rush. Back in the day, everyone was on the rush to strike gold and hopefully become rich. Of course, many tried and didn’t strike gold but those who did became rich. During that time, another group of people became very rich but did not do any gold mining, it was those who sold tools to the people rushing to strike gold. In many cases, the people who sold the tools became richer than the people who actually struck gold. In our case, I think the people hoping to strike gold are those trying to buy the best real estate for a profit, the people who strike gold are the few people who are actually successful in creating their real estate empire, and the people who sell the tools would be the real estate service companies.

So here’s 2 real estate service companies in Canada that are killing it as stock investments.

1) First Service (FSV.TO) 1:53
They are a Toronto-based real estate service company that provides property management services to residential and commercial customers in the United States and Canada. This includes on-site staffing for building engineering and maintenance, full-service amenity management, security, front desk concierge and financial services. If you’re living in a Toronto condo that has on site property managers or front desk, there’s a chance that they are part of First Service. Regardless or not if the real estate market is doing well or tenants are not able to pay, First Service isn’t directly affected and they’re contracted for their ongoing job responsibilities to the building owners.
Stock performance (1Y, 5Y, 10Y) 2:26
Financial profile 2:45
What’s next for First Service? 3:26

2) Altus Group (AIF.TO) 3:56
Altus Group is a Toronto-based company that provides software, data solutions, and independent advisory services to the commercial real estate (CRE) industry in Canada, the United States, Europe, and the Asia Pacific. They are mostly known for providing data analytics, real estate valuation and tax services, and market research insights. For instance, here’s a sample report that they issued talking about the various Toronto real estate markets like commercial, industrial, office, and residential, as well as some of the trends they’re seeing.
Stock performance (1Y, 5Y, 10Y) 4:27
Financial profile 4:46
What’s next for Altus Group? 5:21

First Service & Altus Group VERSUS the BEST Canadian REITs 5:45

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[TIMVESTMENTS]

Thoughts on the Canadian real estate service stocks?

[delinquense]

Did my research. Regrettably, I find neither company to be worth any additional consideration. Earnings are spotty at best. Neither is cheap based on either relative or historical prices.
Yes, you could have made money with these companies had you bought them 5 years ago, but going forward they don't seem to offer me an acceptable risk/reward ratio. Slow and steady wins the race.

[VineetontheBeat]

Excellent video and great metaphor. I will look into these for sure!

[goldman]

very insightful video and very good comparison. i have been invested heavily into interrent reit past few months but your video made me consider FSV definitely to do my research on it. thanks for finding great canadian hidden jwels like these ;). looking forward to more vids.

[vivienl]

Interesting! I was thinking of buying REITs, now you got me interested in real estate service stocks. I will do more DD

[rhythmandacoustics]

First Service is not bad, only 2 things though. 1. It is highly leveraged. 2. It is super overpriced.
Altus is not bad I guess. I still like my REITS. I do not care about Price Growth, I am a buy and hold kind of guy. I hope the stock tanks so I can buy more and get a huge amount of the outstanding shares. As long as free cash flow is good, screw the capital gains. I get my dividends in a large amount.

[Slickpete]

great video Tim, never thought about this part of real estate . any good Real Estate Services ETF'S out there if any ???

[muffemod]

Overvalued and crazy high P/E ratios :(