Priced out of the housing market? 5 creative financial ideas to get In

By Sean Cooper

Special to the Financial Independence Hub

Are you finding it a challenge to buy real estate in the big Canadian cities? If you’re looking to purchase a home in Calgary, Toronto or Vancouver, even buying with the minimum five per cent down can be tough. (The new mortgage stress test sure doesn’t help.)

Despite rising home prices, millennials haven’t given up on buying homes. In fact, they’re still finding ways to get into the real estate market. Survey after survey shows that younger folks still see homeownership as a good long-term investment.

So how do you actually afford to buy real estate in the more expensive markets? Let’s look at five creative ways to still get into pricier real estate markets:

1.) Tapping the Bank of Mom and Dad

The “Bank of Mom and Dad” may be a term you’re already familiar with. Property virgins are increasingly turning to their parents for financial help with a down payment. Parents often gift their adult children some or all of their down payment. Often, this benefits both parties. The adult children can live closer to their parents in a good neighbourhood and see each other more often. The parents may be able to provide childcare, while the adult children can look after their parents in their old age.

2.) Buying with Family and Friends

Are you finding it tough to qualify for a mortgage if you’re single? You don’t have to necessarily buy a property with a spouse. A new trend is to buy with family and friends. If you know a family member or friend that you trust, why not combine your finances and buy a home together? Two incomes and down payments: sure makes it a lot easier to afford a home in a nice neighbourhood. (However, if you buy with family or friends, be sure to have a written agreement in place so that when someone wants to sell, your expectations are in line.)

3.) Buying in a Satellite City and Renting in the Big City

Can’t afford to buy in the big city, but still want to own a piece of the real estate pie? Why not buy in a satellite city and rent in the big city? This is becoming a lot more common in Toronto and Vancouver, where the cost of homeownership is the highest in the country. When you buy in a more affordable satellite city, you can start build up equity to eventually move into the big city.

When looking for a satellite city, look for an up-and-coming area. (If you’re unfamiliar with the local market, a real estate agent can help you choose the best locations outside the city to buy in.) And when you buy the property, don’t just leave it empty. Find a property that’s cash flow positive and rent it out to pay down your mortgage even sooner.

4.) Operating a Rental Property

Instead of leaving your basement vacant, why not rent it out to tenants? Thanks to the sharing economy, it’s simpler than ever to make money from your home. Rent it out short- term through home sharing services like Airbnb (just make sure you comply with local bylaws and if you’re living in a condo, make sure you’re allowed to) or long-term. When you become a landlord, you can help subside the high cost of real estate in more expensive markets, not to mention pay down your mortgage years sooner.

Be sure to treat your tenants well. There’s nothing like giving a bottle of wine to your tenants around the holidays to say thank you. If you respect your tenants, they’re more likely to respect your property and treat it with care.

5.) Renting-to-Own

Have you ever considered rent-to-own? It’s a unique arrangement that can help you move up the property ladder sooner. With rent-to-own, you pay a slightly higher monthly rent than normal. The slightly higher amount of rent goes towards your eventual down payment. After a couple years of saving, if all goes according to plan you’ll have your very own down payment, which you can use towards buying the apartment you’re living in. It doesn’t get any more convenient or simpler than that!

Disclaimer: Contact a mortgage professional to see if the strategies mentioned apply to your specific situation.

Sean Cooper is the author of  Burn Your Mortgage and managing editor of

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