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A cottage for sale sign in Ontario’s Muskoka region on Friday May 19, 2017.

Mark Blinch/The Globe and Mail

Like many people in their late 20s and early 30s, Heather Payne and her husband, Shawn Konopinsky, are bright, ambitious and successful – but they don't own the place where they live with their one-year-old baby. Instead, they own a cottage.

For the past five years, they have rented their apartment in the downtown Toronto neighbourhood of Parkdale, joining the 50 per cent of millennials who are still renting their homes by age 30, according to the 2016 census data, compared with the 45 per cent of boomers who hadn't bought their place by the same age.

But the two tech entrepreneurs (she's the chief executive of HackerYou, a hands-on coding academy, and he's the co-founder of a digital agency called Nascent) have "a lucky situation," Ms. Payne says. They got into their place before the city's rental prices started to soar, so they can comfortably afford the rent. Vacancy rates in Toronto reached a 16-year low in November, causing average rents to spike to more than $2,000 a month for a rented condominium.

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What they've decided to do with their savings is also increasingly common among Canadian millennials in the same position. They've invested in a recreational property outside of one of this country's overheated urban markets – well outside.

Earlier this year, they bought a vacation home two hours east of Toronto in Prince Edward County, a rural getaway replete with rolling hills, wineries and beautiful vistas of Lake Ontario.

Ms. Payne and Mr. Konopinsky are more representative of their generation than you might think. According to a 2017 study from Re/Max, almost two-thirds of Canadian millennials would consider buying a recreational property over the next decade.

Another study from Toronto-Dominion Bank says millennials are twice as interested in owning a recreational property than the rest of the population.

This non-traditional entry into the property market is partly the result of two intersecting trends: sky-high real estate prices in Canada's largest cities (the average price of a detached house in Toronto passed $1.2-million in 2017) and the rise of the sharing economy, in which tech-savvy millennials leverage their assets (cars, parking spaces, houses) to offset costs and make extra money.

"Outside of the city, your money can go a lot further," says Ms. Payne, who also owns two additional properties in Hamilton, which she and her husband use as long-term rentals. "It's a way that you can get into the market at a lower price."

Plus, Ms. Payne says she and her husband escape to their Prince Edward County place once a month, but the rest of the time they have it listed on Airbnb.

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While Ms. Payne cautions it's important for a buyer to do "careful financial modelling" to ensure he or she fully understands the expenses (mortgage payments, utilities, property taxes and harmonized-sales-tax remittance from any short-term rental revenues), she also says the interest on Airbnb has "exceeded expectations" in the six months they have offered the cottage for country getaways. The couple is now considering another recreational property north of Toronto in Muskoka.

Ben Sammut is a 26-year-old mortgage broker who specializes in helping his generational cohort finance their real estate ambitions. Mr. Sammut has seen the trend of more millennials buying recreational properties. "It's what a lot of millennials are starting to do," he says.

"My advice to young buyers looking to get into the property market is to buy where you can make money; rent where you want to live," he says. "It's not a new concept," he adds, although it might seem odd to older generations who consider "every dollar of rent a dollar wasted." Instead, it's a way to build equity "with someone else paying the mortgage," while generating extra income and subsidizing life in a pricey city.

But Mr. Sammut also points out there are many things millennials should know when considering this route. For example, it can be "complicated" to get a mortgage on a rural property, he says, not necessarily based on the buyer's credit score or income, but based on the property itself.

While the average cost of a waterfront cottage in place such as Haliburton is a relatively affordable $240,000, "if that place is a small plywood box," Mr. Sammut says, "no bank will touch it."

"It's because the bank isn't just taking a risk on you," Toronto mortgage broker Susan Copp of Dominion Lending explains. "They are taking a risk on the property as well and need to be able to sell it to someone else if you default on your payments."

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According to Ms. Copp, the baseline for a bank is "850 square feet and winterized, with potable water, heating, a full kitchen, year-round access and a three-piece bathroom." While she notes that some alternative lenders might take on higher-risk properties, those lenders also tend to charge higher interest rates and have additional fees.

There can also be challenges with renting, especially short term. Lori Slik is a real estate agent in Price Edward County, an area where Ms. Payne, Mr. Konopinsky and many other young people are investing.

She echoes Ms. Payne in saying that careful modelling is critical to determining whether the potential revenues will cover the costs. She has one young client who decided to sell her recreational property this year because it was more challenging than expected to manage the place from afar.

"Weekly rentals aren't easy," Ms. Slik says, adding that many people don't factor in "having to pay a management company to take care of their property and get it ready for new renters coming in and out … not to mention all the other forms of maintenance, including the lawn and the septic system."

Toronto real estate agent Farrah Haniff adds that while short-term rentals such as the kind done through Airbnb might reap a higher, per-night premium than longer term rentals, the stable income of renting a place out for more than a few nights or a week at a time might be worth the trade-off.

Especially if, as Ms. Haniff says, "real estate is a long-term strategy," and you aren't using the property yourself.

She has a millennial client, 27-year-old personal trainer Jay Chandra, "who bought a condo from me this summer and reached out to me to buy a second property for investment a few days ago," she says.

"The first place I might look is Niagara," Mr. Chandra says. But ultimately, through careful investing, he'd like to buy a place in his ultimate getaway destination. "I want to retire in Jamaica," he says.

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