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Montreal Revenue Property: Finding good income properties in Montreal

Montreal Revenue

Property: Finding good

income properties in


Investing in a good Montreal revenue property can be very rewarding if you know what you are doing. Finding the right multiplex can be somewhat challenging and time consuming especially if you are doing the work without a knowledgeable broker. At the time I write this article, there are more than 500 Montreal revenue properties available but not all of them are actually creating cashflow.

2 Ways of buying income properties in Montreal

There are two different strategies used to buy income properties in general: For cashflow and for capital gains. If you are just getting started in the world of investing in real estate the only strategy you should use is for cashflow.

When buying revenue property in Montreal for cashflow you will typically be buying multiplexes in areas that are up -coming. The main reason being that multiplexes in areas that are already very popular tend to be priced so high that the revenues do not offset the expenses. To find a suitable cashflow property, the income must be enough to pay for the mortgage, taxes and operating expenses.

A good rule of thumb is that the leftover cashflow should be equal or better to 10% of the initial downpayment. Otherwise, there won't be enough money to take care of the unexpected expenses. This is known the cash on cash return ratio. Having a lower cash on cash is acceptable in more desirable areas of the city.

Buying property for capital gain is the strategy used in highly desirable areas like the plateau, westmount, outremont and TMR. This strategy takes into account that properties in highly desirable areas appreciate rapidly over time. Oftentimes, these multiplexes do not generate enough cashflow to offset the expenses but the capital appreciation over time will be great enough to provide a good return on capital when sold. This strategy is more risky because it's a bit like gambling or playing the stocks. Buying land is also the same strategy. Only use this strategy if your cashflow can accommodate the negative cashflow created by the new property.

Advantage of buying for Montreal revenue property for cashflow

The beauty of buying income property for cashflow is that it still benefits from capital appreciation. Since you buy the multiplex in upcoming areas, the value of the actual building also increases over time. So the cashflow pays for all of the expenses to carry the property and it can be sold or refinanced after some time for a nice capital gain.

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