by Anthony D’anello | Oct 12, 2021
There are a lot of reasons why you should invest in real estate, particularly in Montreal. Buying a rental property there, for one, is an excellent way to produce a profitable increase in value. The number of homes on the market now is at a record low, though, and consequently, there’s an extremely dynamic market with the sellers holding all the cards.
Is this your first time investing in Montreal real estate? Here are some considerations before putting an offer on a property you won’t be living in:
Are you interested in a property breaking even, with the belief that you can sell it at a profit several years from now? Or would you rather have an investment that will generate monthly income? Perhaps you just need an income source to help with your mortgage and not necessarily fully cover the expenses for your property. Whatever your goals are, it’s highly advisable that you clearly define what you intend to get out of your investment. This way, you don’t end up hemmed in a property that isn’t exactly giving you the returns you’re hoping for.
Many homebuyers know their dream house once they see it. But if you’re primarily buying the property for investment, you must ensure that the numbers are working in your favor. Make a spreadsheet and start calculating your estimated income versus the expenses for the property you’re interested in. Factor in maintenance costs and cushion in the event that there is a delay in your tenant’s payment. The same goes for when they terminate their contract with you if you don’t find a new one right away.
It’s easy to assume that you have the best deal once you get the lowest-priced property. You must pay close attention to big-ticket items in your potential investment property. These include the roof, windows, and heating, ventilation, and air-conditioning systems, among others. Newer buildings may cost a little bit more. But they likely require fewer repair and maintenance headaches. Besides securing an inspection report, ensure that the building complies with all the necessary safety, maintenance, sanitation, and zoning requirements. It would also help to ask existing tenants if there are any outstanding maintenance issues they know of.
Ask for copies of the lease agreements from current renters. This way, you can examine the key terms of the lease, such as their length of stay, when the lease will be up, the cost of the rent, and more. It’s also highly recommended to visit the Tribunal administratif du logement as well as the Court of Quebec. They can give you information regarding any complaints filed against the tenants, such as nonpayment for rent. Equally important is to read up on tenant’s rights. Keep in mind that Quebec’s tenant protection laws are pretty strict. You can’t simply hike up the rent for no reason at all. You can’t also evict a tenant (even a bad one) without effort.
Purchasing a potentially profitable investment property is never easy as it looks. This is especially true when you want to make a purchase in a tight seller’s market. But being strategic and doing your due diligence can go a long way, and then you can get the payoff you want.