This year, we’ve experienced a noticeable increase in clients interested in the idea of owning a revenue property. The volatility of the stock market in 2020 has been unsettling. It therefore comes as no surprise that individuals are looking for a more secure place to invest – “bricks and mortar”. The local real estate market’s performance has been exceptional, with the median price increasing by 47% in only the last five years. The real estate market’s continuous appreciation accompanied by historically low interest rates makes it seem like a “no brainer” to diversify your portfolio by investing in real estate.

Owning a revenue property comes with the responsibility of being a landlord, which can be both a rewarding and challenging experience.

REWARDS

Property ownership allows you to earn passive income through your savings, while also building equity with your tenants’ rent. Over time, a landlord can increase rent revenue through small improvements that will generate a positive return in cash flow and on the market value of the property. Many of our clients simply enjoy the ability to have greater control over their investment.

CHALLENGES

Ownership comes with responsibility, things can break or go wrong and since you are the owner, the buck stops with you. Periodic repairs are normal and it’s important to have a maintenance and repair plan and budget. Additionally, tenants don’t generally treat your property like their own, so you have to be ready to roll up your sleeves between tenants to give the property a refresh. Choosing the right tenant’s is of utmost importance. Finally, although vacancy rates are very low, you can be faced with some periods of reduced or no rental income at all. You must be financially able to carry any associated costs on the short term.

HOW TO GET STARTED?

For most investors, the first purchase is the biggest leap of faith, and it needs to be comfortable. That is why most start out with a small single-family dwelling, solid bungalow or maybe a townhouse or a condo. These types of homes are generally easy to rent, easy to maintain and still somewhat affordable. A duplex or triplex may also be considered, although there are not too many options in the West Island and are very sought after, so finding one with a good potential return is a challenge. Individuals are much better off being represented by an experienced realtor to guide you through this buying process. We have tools to help evaluate different opportunities and can guide you towards the investment option that makes the most sense for your situation and risk tolerance.

SOME TIPS

Look for properties in a good location where there will always be rental demand. We have found that properties in the $1500-$3000/month range offer the most stable tenant profile. (professionals, small families). For higher returns, multi-residential apartments places like Ste-Anne de Bellevue are of interest due to a large student population. Choosing post grad students or having parents co-sign on leases are important to protect your investment.

It’s also important to have good connections/contacts with tradespeople in your network so you can always get help with unexpected repairs.

Consult an accountant to see how your initial purchase and the associated costs could help you with some income tax savings.

Separate the investment from your own home! This one is tricky, but a landlord must learn to sperate what makes sense in a rental property from what you would do at your home. There are different considerations when looking for ROI versus looking to renovate or update your own residence. You want to provide a safe and clean environment to the tenants, but there will be a difference in terms of quality and materials used in a rental.

Finally, be patient. In our market, quality investment options are few and far between. Having the cash and financing ready and in place is an important first step, but don’t jump on the first option you consider. Having a local expert present and evaluate options is a key.

Our firm helps dozens of investors with the purchase and sale of revenue properties every year. Give us a call and we would be happy to take the time to meet and explain how we can assist in the process.