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There are times when being a smart investor means saying no to something that has made lots of money for others.

Right now, this applies to real estate investments in cities where prices have already soared. Ever heard of the “buy high” school of investing? It’s for people who jump late onto investing trends and end up exposing themselves to more downside risk than upside potential. Smart investors don’t dismiss real estate investing. They just say they’d prefer to wait for more attractive prices.

A reader in a southern Ontario city not too far from Toronto recently contacted me to complain about being pressured to invest in real estate. “I'm surrounded by friends and family urging us to get into real estate investing,” this reader said. “While I've seen family succeed in this, those properties were purchased prior to the sky-high prices that exist now. Is it too late to get into real-estate investing in my late 30s?”

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This reader has actually done some legwork. Conclusion: It’s hard to find properties that would generate a monthly income after paying the mortgage, maintenance, tax and other costs. This means carrying the property in a break-even or negative cash flow situation while hoping for price increases. “[I’m] not sure if we should jump in before prices continue to climb or wait it out for an opportunity, or is the great idea of real-estate investing simply worn out?”

Real estate investing is a great idea, long term. But for now, it might just be worn out in the cities where prices have soared. There may be pockets in cities with high prices where money can be made, but they’re difficult for the novice to spot. The risk is that savvy real estate investors will use newcomers as a way to exit properties that have strongly appreciated in price. So here’s what to say if friends and family urge you to get into the latest investing fad, be it real estate, cannabis, Internet stocks or tulip bulbs. Tell them you share their excitement about the investments in question, but you’re also a bit cautious. You’ll keep an eagle eye on the sector and jump in when a good buying opportunity presents itself.

After a correction in the price of real estate or any other hot investment, people won’t be urging you to buy in any more. At that point, let the bargain-hunting begin.

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