Short answer: there are four practical paths — (A) own physical property in Canada (direct buy and rent or flip), (B) buy publicly traded Canadian real estate (REITs / REIT ETFs / stocks) from your US broker, (C) invest in private / institutional real‑estate vehicles (private REITs, syndications, crowdfunding), or (D) use indirect US investments that have Canadian exposure (US-listed global REITs or funds). Which is “best” depends on how much capital you have, how involved you want to be, tax and residency constraints, and your risk tolerance. Below I summarize each option, the main pros/cons, key legal/tax/financing points for a U.S. investor, and practical next steps — with Canadian government and market sources for the most important facts.

A. Buy Canadian rental or resale property (direct ownership)

• What it is: buy condos, single‑family homes, or multi‑unit buildings in Canadian cities and hold for rental income or capital gains.
• Pros: direct control of asset; potential rental cash flow and local price appreciation; leverage available.
• Cons: active management (or property manager fees), tenant laws vary by province, repairs & vacancy risk, currency risk (CAD ↔ USD), and additional tax/reporting for non‑residents.
• Important rules & taxes to know:
  • Non‑residents receiving rental income: pay Canadian non‑resident tax — payor (property manager/tenant) must withhold 25% of gross rent unless you apply for a net‑income withholding (Form NR6) or file an election under Section 216 to be taxed on net rental income. (CRA guidance). (Canada.ca)
  • Canada has implemented restrictions on some purchases by non‑residents (a federal foreign‑buyer ban/extension was enacted in recent years) — check the current status and provincial rules before buying. (Reuters reporting on the ban/extension.) (Reuters.com)
  • Mortgages for non‑residents: Canadian lenders typically require larger down payments and stricter underwriting for non‑resident borrowers — expect higher down‑payment requirements and different terms (confirm with banks/mortgage brokers).
• When this makes sense: you want direct control, plan to visit/manage the property (or hire a manager), can handle the cash flow impact of tax withholding, and know Canadian landlord rules.
• Practical next steps: pick a target market (city/neighborhood), talk to a local realtor and property manager, get pre‑offer tax & mortgage advice from a cross‑border accountant and a Canadian mortgage broker, and plan for the NR6/Section 216 process if you’ll be non‑resident owner.

B. Buy Canadian REITs or Canadian REIT ETFs (publicly traded)

• What it is: buy shares of Canadian REITs listed on the TSX or an ETF that aggregates Canadian REITs (e.g., iShares S&P/TSX Capped REIT ETF, ticker XRE) through many U.S. brokerages (some ETFs trade on U.S. exchanges as well).
• Pros: liquid, low‑friction exposure to Canadian real estate sectors (residential, industrial, retail, office); no landlord duties; easier tax reporting (dividends/capital gains reported through brokerage); can start with small amounts. Example ETF: XRE (iShares S&P/TSX Capped REIT Index ETF). (BlackRock.com)
• Cons: market volatility, REIT dividends can be cut, sector concentration risk (Canadian REIT market is smaller and more concentrated than U.S.), currency effects.
• When this makes sense: you want exposure to Canadian real estate but prefer passive, liquid investments and don’t want to manage property.
• Practical next steps: compare Canadian REIT ETFs (MER, yield, holdings), check whether your U.S. broker can trade TSX listings or buy US‑listed equivalents, and account for CAD/USD conversion and foreign tax withholding rules on Canadian dividends (check broker and tax advisor).

C. Private real‑estate funds, syndications, and crowdfunding platforms

• What it is: invest with a sponsor in pooled deals (commercial developments, multi‑family rentals) or use online crowdfunding platforms focused on Canada.
• Pros: access to institutional deals and potentially higher returns, passive (sponsor manages assets).
• Cons: illiquid, often high minimums, sponsor risk, and complex tax reporting for non‑resident investors.
• When this makes sense: you want potentially higher returns, are comfortable with illiquidity, and can do due diligence on sponsors and tax structure.
• Practical next steps: vet sponsors, review offering documents, confirm non‑resident investor eligibility, and get cross‑border tax/legal review.

D. Indirect / US vehicles with Canadian exposure

• What it is: invest in global REITs, US funds that own Canadian assets, or multinational REITs with Canadian holdings.
• Pros: easier tax/reporting and often trade in USD; similar economic exposure to Canada without buying within Canada.
• Cons: less pure Canadian exposure and possible dilution of country‑specific returns.
• When this makes sense: you want Canadian exposure but prefer to keep everything inside U.S. investment accounts.

Key market context and risks (recent, important points)

• Rental markets and supply: Canada’s housing agency (CMHC) reported increased rental supply in 2024–2025 and easing advertised rents in several major markets (Toronto, Vancouver, Halifax, Calgary) while other cities show slower rent growth — this affects rental yield expectations and vacancy risk. Use local CMHC/market reports when choosing a city. (newswire.ca)
• Foreign‑buyer policy: Canada enacted a foreign‑buyer purchase restriction/ban that has been extended in recent years; rules and enforcement can change, so confirm the current federal and provincial status before pursuing a purchase as a non‑resident. (Reuters.com)

Tax, reporting and cross‑border issues you must handle

• Canadian withholding tax on gross rental receipts for non‑residents (25%) unless CRA approves net withholding (Form NR6) or you file a Section 216 election to be taxed on net income — plan cash flow for withholding and timing of refunds. (CRA guidance.) (Canada.ca)
• U.S. tax reporting: you must report foreign rental income and foreign investments on U.S. returns (Form 1116 for foreign tax credits, FBAR/Form 8938 for foreign financial assets if thresholds met). Cross‑border tax rules are complex; use a CPA experienced in US–Canada tax matters.
• Estate, capital gains, GST/HST, provincial property transfer taxes, and local landlord/tenant laws vary by province — get local counsel/accountant advice.

How to pick the best route for you (short checklist)

1. Decide hands‑on vs. passive: direct ownership = hands‑on; REITs/ETFs = passive.
2. Capital & leverage: do you have enough cash for large down payments and reserves (non‑resident mortgages often require higher down payments)?
3. Tax comfort: can you handle cross‑border tax compliance or hire specialists?
4. Time horizon & liquidity needs: direct ownership and private funds are illiquid; ETFs are liquid.
5. Market selection: use CMHC and local market data to choose cities with population/job growth and limited new supply (or the opposite, if you want value/turnaround opportunities). (newswire.ca)

Practical “starter” plan for a U.S. investor

• Conservative / low friction: buy a Canadian REIT ETF (example: XRE) through your broker to get immediate exposure and avoid landlord/tax withholding of rental income. Research MER, yield, and sector mix first. (BlackRock.com)
• Medium involvement: partner with a Canadian property manager and buy a single rental unit in a lower‑maintenance market; arrange NR6 or Section 216 processes and budget for 25% gross withholding until you have NR6 approved or file to recover net tax.
• High involvement: buy multi‑unit (syndication) with a proven sponsor — do due diligence and get cross‑border tax counsel.

Bottom line and final recommendations

• If you want a simple, low‑cost way to get Canadian real‑estate exposure, use Canadian REITs / REIT ETFs (liquid, passive). Example ETF: iShares S&P/TSX Capped REIT ETF (XRE). (BlackRock.com)
• If you want direct ownership, budget for extra down payment/mortgage hurdles, withholdings on rental income, provincial rules, and extra compliance (CRA NR6/Section 216). Confirm whether the federal foreign‑buyer restriction applies to your target purchase. (Canada.ca)
• Always get cross‑border tax and legal advice before you invest. The CRA rules and provincial regulations are the most important “gotchas” for non‑resident investors. (Canada.ca)

If you want, I can:

• Compare 3 Canadian REIT ETFs (fees, yields, holdings) side‑by‑side.
• Outline the step‑by‑step process and approximate costs for a U.S. buyer to purchase a rental condo in Toronto or Vancouver (mortgage/down payment, taxes, ongoing costs).
• Find current federal/provincial rules that would affect a foreign buyer for a specific Canadian province or city.

Which of those (or a different next step) would you like?