Someone who has broad experience of the Bermuda real estate market is Drew Horsfield of Bermuda Provident.

As a property appraiser, he regularly deals with lenders, architects and buyers and is familiar with most of the real estate projects on the Island.

Mr. Horsfield says it is very challenging for first-time buyers in pursuit of a piece of the 'Rock'.

"I've even heard of people living in a converted ferry," he says. "May be we should be bringing in hospital boats for people to live on. In Athens, they are going to moor up a couple of cruise liners to accommodate people for the Olympic games!"

In reality, he says, the options fall into four categories:

Condominiums

Mr. Horsfield says that a condominium may be the only possibility for a budget of $500,000.

"The ideal of a small cottage on its own quarter acre of land is becoming so rare as to be non-existent."

Buy to rent

One strategy is to buy or build a property and then rent it out. "It's becoming quite common" says Mr. Horsfield, agreeing that there are many Bermudians who own a house, but do not live in it.

If you have borrowed $560,000 for a three bedroom house costing $700,000, your monthly mortgage repayments would be roughly $7000. For most people, that would not leave an awful lot to live on. But even if you can't afford to live in your house at the moment, you could rent it to an executive and in the current buoyant market, a three bedroom house with a studio apartment might fetch $6,000, leaving a shortfall of only $1000 per month.

"But then you need somewhere to live" says Mr. Horsfield. The whole premise relies on being able to find somewhere reasonable to rent for yourself to live in.

Some people are lucky, of course and are able to find a reasonable apartment for $2,000 per month. They might even be able to share accommodation with other family members. Either way, this option requires a fairly prudent and patient approach and probably a slight change to lifestyle as you will want to put every surplus dollar towards paying off your mortgage that little bit quicker.

Build your own house

Average construction costs are approximately $230/square foot, according to Mr. Horsfield. The average size of a three bedroom houses is currently 2,000 square feet.

Your construction costs for a house of that size (including small studio apartment) would therefore be $460,000. Add another $250,000 for the cost of the plot of land and the total is $710,000. Those figures include all the fixtures and fittings: carpets, kitchen and bathroom fittings etc. "That's handing over the keys and moving in. Just bring your eggs, milk, furniture and whatever goes in your closets." he says.

Mr. Horsfield says that building your own property does tend to work out cheaper than buying an existing property, but what about the stress of construction?

"Your architects take the stress out of it" says Mr. Horsfield. It is important, he admits, to choose the right architects.

Fix it up

If you can find a house in need of major renovation, you may be lucky enough to get it at a cut price. "It depends on what's needed," says Mr. Horsfield. The costs of renovating work including plumbing, electrics, new bathrooms and new kitchen can work out at approximately $100/square foot, so for the average 2000 square foot house, you might be able to fix her up for $200,000. If you can find it for less than $500,000 you may end up ahead of the game.

Bear in mind that you may not be able to do exactly what you want, says Mr. Horsfield: "Where you are working around structures, you end up with a compromise."

That's why some people resort to knocking down an existing house and rebuilding it larger or in the way they want it. "We're even seeing that in Tucker's Town" he says "People want to start with a clean slate."

*The examples in this article are for illustration only and do not constitute advice. If you are considering making a property investment, you should consult a qualified real estate or an investment professional who can consider your specific circumstances.