Local real estate prices too expensive? Here are come creative solutions...

Shopping for real estate in areas like Montreal’s Plateau Mont-Royal, or the GTA. Markets in many desirable areas present a challenge for first-timers and more experienced investors alike.

It’s hard to find properties that cash flow. Barriers to entry for a first purchase are about to take a step skyward. With changes planned to lend criteria early next year, many will see their buying power decrease. Tempting to sigh and conclude you’ll never be able to get into the real estate game?

Don’t! Maybe it’s just time to get creative.

Answers exist outside your local market. Instead of plopping down 500k for a condo in the Plateau, why not consider a triplex in a less sexy part of Montreal? Duplexes and triplexes in areas like Mercier or Lachine go from 300k-450k. At this price, it’s possible to find properties that break even or have slightly positive cash flow.

Not stoked about living in Lachine? Or Hochelaga? No problem! If you want to live in a pricey area, consider renting. When you run numbers, you’ll be surprised how cost-effective renting may be. Let someone else lose money on negative cash flow!

Don’t forget: you pay your mortgage on a principal residence with after-tax dollars. Add to this the fact that interest in your private residence is not tax deductible. Now you’ve added two tax burdens to compound already exaggerated property prices.

If you live in Toronto, prices may have you thinking you’ll never own property. Did you know a one bedroom condo in Montreal can go for 175-200k?

With a property like this, well rented, you can cover your costs with pre-tax rent dollars. You can deduct the interest as a business expense. If Montreal seems too far, what about student havens like Kingston or London? Prices in these areas are lower than the GTA, and you’ll have a pool of student-renters with parents as guarantors who can sign your leases. Food for thought!

Whatever market you choose to live in, don’t let soaring prices dash your investment hopes. Think again! In a challenging market, I like to put a twist on an old proverb: when the going gets tough, the tough get creative.

Yours in property investing,

Terrie Schauer