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

Shopping for real estate in Montreal’s Plateau Mont-Royal, the GTA, or BC can be frustrating. Markets in these 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. It may be tempting to throw up your hands and conclude you’ll never be able to get into the real estate game, or that your portfolio is doomed to stagnate at its current size.

Not so! Maybe it’s just time to get creative.

There may be answers 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. If you want to live in an overpriced area, why not consider renting? When you run numbers, you’ll be surprised how cost-effective renting may be.

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

Worried that with Toronto prices you’ll never own property? 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 dollars. You can deduct interest as a business expense.