Montreal has become an investor hot spot for many years now, most of this popularity has come from a strong economic growth and boom in condominium developments. This growth in popularity for condos have some clear advantages (and of course some disadvantages) which have attracted local and foreign investors.
Advantages of Condos:
- Low Maintenance: Condos unlike plex's and single family homes are very low maintenance. All major building repairs and other ongoing expenses are usually covered by the condo fees.
- Easy to rent: Montreal's unique 50/50 renters/owners market and low vacancy rates has made it easy for condos to maintain their rental ROI year on year. The modern nature/look of new condos has made them popular with young and old demographics who are looking for something that doesn't require much maintenance and is "move in ready".
- Static expenses: Condo fees, property taxes and rental management are easy to forecast without having to worry about surprise major repairs that could set you back 10's of thousands of dollars (roof, plumbing, electrical, etc). In a worst case scenario, condo fees or property taxes increase which will only account for a small negative expense and can be accurately predicted based on historic data.
- Low purchase cost: The boom of condo developments in Montreal has also helped in bringing down the overall price of condos up for purchase. This lower purchase cost has made it easier for investors to diversify a condo portfolio across different buildings in different locations.
- Easy to re-sell: This is a half truth, not all condos are easy to re-sell and is very much based around strategically picking a condo as an investment. Chosen well, a condo will not only bring in a healthy rental return, but also continue to increase in value.
- Tight mortgage regulations: We see this as an advantage in Montreal/Quebec - A leveraged market comes with a higher risk (as seen during the 2008 GFC). With higher down payments and other tighter mortgage regulations, there is higher percentage of total property ownership. During tough economic times this high level of ownership helps maintain the current market price of properties. Investors who own are more likely to hold their property until the market recovers rather than being forced to sell.
While we can see some clear advantages when buying a condo as an investment, there are also some disadvantages to buying a condo in Montreal, most of which come from incorrect selection of a condo as an investment.
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