From 2021 to 2022, average vacancy rates in Montreal fell from 3.7% down to 2.3%, according to the Canadian Mortgage and Housing (CMHC) rental market report.
Meantime, condo vacancy continues to remain stable at 2% during the same period. As rents across the board increase, the demand for condo rentals has also increased. With a stable demand, buying a condo as an investment may be an interesting option.
Currently on Centris, (August 2023) there are over 2,500 condos under $600,000 available on the island of Montreal. There are approximately another 1,000 available in the $600,000-800,000 range.
When deciding whether to buy a condo to rent out instead of focusing on investing in a building with multiple units, it’s important to look at all the facts, including your own investment goals, financial capacity, and personal preferences. Each option comes with advantages and disadvantages.
If you are a new investor, a condo may be a good option for getting started as a landlord. It’s a little easier, with less responsibility and maintenance worries.
We’ve compiled a list of some of the possible benefits of condo investment here:
Lower Initial Investment
Condos generally have a lower upfront purchase price compared to buildings with multiple units. This can make them more accessible to investors with limited capital or those looking to start with a smaller investment.
Easier Property Management
Condos often come with homeowners’ association (HOA) services that handle common area maintenance, repairs, and some utilities. This can reduce the burden of property management and maintenance on the landlord, especially for investors who prefer a more hands-off approach.
Fewer Management Responsibilities
With a condo, you typically only need to manage one unit, as opposed to managing multiple units in a building. This can lead to less complex property management, especially for investors who are new to real estate.
Lower Maintenance Costs
Condos often share common amenities and spaces, which can lead to lower overall maintenance costs compared to maintaining multiple units in a building.
An Easy Entry into Real Estate Investing
Buying a single condo allows investors to enter the real estate market with a relatively low risk and a smaller initial investment. It can serve as a stepping stone for gaining experience before potentially scaling up to larger properties.
A More Diverse Tenant Pool
Condos can attract a diverse range of tenants, including young professionals, small families, retirees, and students. This diversity can help reduce vacancy risk and potentially lead to more stable rental income.
Location Advantages
Many condos are located in prime urban or desirable areas, making them attractive to renters who want convenient access to amenities, transportation, and entertainment options.
Potentially Higher Appreciation
In certain markets, condos located in desirable neighborhoods can experience significant appreciation over time, potentially leading to higher returns if the property is eventually sold.
Easier Financing
Financing options for purchasing a single condo are often more straightforward and accessible than those for buying a multi-unit building.
Flexibility for Growth
Owning a single condo allows you to test the waters of real estate investing without committing to the complexities of managing a multi-unit property. This can provide you with the flexibility to adjust your investment strategy as needed.
Condo Investment Downsides
It’s important to note that while buying a condo for rental purposes has its advantages, there are also potential downsides, such as homeowner association fees, limited control over property modifications, and potential restrictions on renting or leasing.
Whatever you decide, the decision should align with your overall investment strategy, risk tolerance, and long-term financial goals. Careful research, due diligence, and consideration of local market conditions are essential before making any investment decision in real estate.
For example, if you are concerned about finding tenants, you may want to buy a condo in an area where the vacancy rate is even lower (1% currently in Montreal suburbs.) Or, you may want to buy a condo downtown, where your teenage child may eventually live to attend university, or in a small town, where you will eventually retire.
Ultimately, the purchase needs to fit your future goals and plans.
If you’d like to discuss the facts, do the math on your potential return on investment, or want to explore some of the options available on the market now, let’s talk!
Book an appointment with Ingrid Hein: 514-942-7288 to get started.
