Michael Rizzello, senior portfolio manager with Canada Post, says that when it comes to real estate, there are three characteristics to consider before investing: cash flow, location and quality of asset.

Rizzello was interviewed by Benefits Canada at the 2012 Real Estate Summit.

All three of these factors interrelate, he says, and plan sponsors can help to maximize their returns by asking the following questions:

  1. Cash flow: Is the asset sustainable? Is there room for growth?
  2. Location: Is it in an area where there will be more demand? “We look for areas that are centrally located, [with] access to transit,” he says.
  3. Quality of asset: Is it an older asset? Are there any renovations needed?

Plan sponsor advice
Investing in real estate can be time-consuming and complicated. For plan sponsors with limited in-house resources and experience, a pooled fund approach or joint venture investment may be more beneficial.

“The current market has very low yield,” Rizzello says. “Making a wrong investment could be very devastating.”

Find out what else Rizzello has to say on this topic, or watch more videos from the summit.