Are you thinking of renting out the condo you have just acquired on a short or long term basis? Here are a few tips to help you understand the positive points as well as the challenges of this type of real estate investment.
The positive points of renting your condo
1- Buying a home to rent out is a reliable and now very common type of investment: what’s more, with rental prices in Montreal on the rise, the return on real estate investment can potentially be very interesting.
2- The purchase of a split-level condo requires only 20% of a down payment, which represents a relatively accessible purchase for first-time investors versus larger income properties.
3- What is the advantage of a rental condo compared to a rented apartment in a duplex or triplex? In general, the maintenance of the building envelope is almost entirely taken care of by the condominium corporation, so you can more easily manage everything remotely!
4- As for the look, the modern condo style is generally very popular with tenants, so it’s easier to rent than some units that have not been renovated and are outdated.
5- And finally, when you buy a condo that is already turnkey, it will allow you to minimize your renovation expenses in the medium term.
Issues related to renting your condo
1- Make sure that renting is allowed in the declaration of co-ownership of the condo you are considering: this will be the basis of such a project! When preparing your offer to purchase, insert a condition that will allow you to obtain this document from the seller, read it in full and declare yourself 100% satisfied. Be sure you can withdraw from the offer if this is not the case.
2- On the financial side, make sure you do the math so you can figure out your numbers: your purchase price comes into play, but so do your expenses (watch out for condo fees that are too high for no reason…) and your mortgage payments. Then set your rent according to your calculations but also according to the market prices and the positioning you wish to have. To help you with your calculations, don’t hesitate to call on your real estate broker, who will be able to assist you in this matter.
3- Choose your location carefully: in fact, you can only optimize your rent if your condo is well located. You should also know that one of the most sought-after criteria in rental property is geographical location, proximity to transportation and neighborhood services!
4- Be careful in choosing your tenants: in fact, if one day you want to take over your unit to live in it yourself or resell it, you will most likely want it to have been ” pampered ” and be in good condition!
5- Don’t forget that you will be bound to your tenant by a lease contract! And the tenant will have to respect the rules of the condominium building (as the owner, you remain responsible). So make sure you take this into account: typically, pay special attention to clauses on animals, smoking in the unit, or the use of parking lots and common spaces and also the prohibition for your tenant to re-rent in the short term.
In short, renting a condo that you recently owned is a profitable and relatively easy investment project! Of course, this type of real estate project involves certain issues: breathe, follow our recommendations and above all, call on your favorite real estate broker to help you!
Article published on april 22nd, 2021
On Via Capitale’s blog
Photo credit : Maurice Nantel