Canada has tightened their mortgage restrictions, allowing new borrowers to borrow less and impacting current homeowners who are seeking a new residence by not allowing for two mortgages at one time during the sale process.

Bad credit, car loans and higher credit risks are a main reason for changes to mortgage restrictions.

But the higher difficulty to obtain a mortgage also opens the doors for investors who want to invest in Canada’s thriving real estate market. Investors have several options from online loans to personal loans and private loans to secure a mortgage.

Investors that want to break into Canada’s real estate market have several options:

REITS Are a Top Option

Investors can choose to invest in REITs in Canada. REITs allow anyone, whether you have bad credit or impeccable credit, to invest in some of the most lucrative real estate options in Canada. Loans companies are negated when investing in REITs which are real estate investment trusts.

These are income-producing real estate options, which include:

• Hotels
• Office buildings
• Commercial spaces

Killam Apartment REIT or Allied Properties REIT are two growing options offering an easy means to invest in Canada without having to go through mortgage hurdles or restrictions. Allied, for example, has an office space rental portfolio of 148 properties in Montreal and Toronto. The REIT also has data center space and other forms of real estate in their portfolio.

The REIT offers a dividend yield of 3.5%.

Investors can always sell their share in an REIT, but the REIT will produce income in the form of a dividend, which can be reinvested.

Rental Property Investment Options

Rental property options also exist, and this is a higher income-producing option than an REIT. You’ll need to hire a manager or manage the property yourself. This is a significant time investment, so it’s not the best option for a fully hands-off investor.

Non-Canadian buyers will have to pay tax on the rental income.

Property managers will withhold 25% of the gross rental and provide it to the Canadian Revenue Agency. You do have a right to claim expenses and may even be able to claim a tax refund. Keep in mind, if you are a US citizen, there are double taxation agreements between the US and Canada.

Canada holds many such agreements with other countries, which prevents you from being taxed twice on the rental income earned in Canada.

Financing requires at least $25,000 to invest in real estate in Canada. Mortgage restrictions are making it more difficult to take a mortgage out on a property, so you will need to provide a greater down payment or be able to prove income to get a loan.

Restrictions have also made rental income forecasts more conservative, so when determining the income of the property to secure a mortgage, it will be more difficult than it was just two or three years ago.

The Greater Toronto Area and Edmonton are two key areas for investors, and while owning your own rental property may prove difficult, and REIT always remains an option.