Is buying a condo in Montreal a good investment?Montreal is experiencing a condo boom, with new developments popping up on every corner. For first-time buyers, buying a condo can be an exciting and intimidating process. It is a big investment, and it is important to evaluate all the options and make the right decision that will fulfill all your needs. Quebecers have a strong propensity to rent rather than buy, and with over 350,000 students living in the city, there is high demand for rental properties. You could enjoy a steady stream of revenue by catering to this market. If you are looking to invest in a condo, think about the potential of renting it out. Generally, if you rent your condo out at a higher price than your mortgage, the down payment is the only cost you need to cover. So, if you’re confused about whether buying a condo in Montreal is a good investment or not, keep reading. In the following post, you’ll get answers to all your questions required to make the right decision.
1-What is the average condo fee in Montreal?The average condo fee in Montreal is around $152 to $700 per month. However, it can greatly vary from the type of condo and the covered amenities like spa, swimming pool, smart systems, gym, etc. The amount that you contribute to shared expenses is calculated based on the relative value of your condo unit compared to the entire building. For example, if your condo is worth 7% of the building, you will pay 7% of the shared expenses. Furthermore, Condo fees in Quebec are adjusted at roughly a 3.5% growth rate per year. Remember, the condo fees are non-negotiable.
2- What is the disadvantage of buying a condo?Just like any other real estate investment, buying a condo undoubtedly has a number of advantages and disadvantages. Here are a few common disadvantages of buying a condo in Montreal.
- The owner is required to pay monthly fees
- Condos can be noisier and more crowded as compared to an independent house
- The time of maintenance and repairs are not usually in your control
- Owners have to pay for all amenities even if you rarely or don’t use them
- Less privacy as compared to a house
- All condos have certain possible restrictions related to smoking, the color of walls, windows, pets, noise level, etc
- Less space as compared to a house in a few condos
- It could be more difficult to sell a condo as compared to a single-family house
3- Do condos increase in value?Condominiums typically increase in value, just like any other property. As per the Montreal Housing Market Report of August 2022, the average price of median condos has increased by 3% over one year. However, if you’re trying to choose between a condo or a house, keep in mind that a single-family home typically appreciates faster than a condo. Last year the price of single-family detached houses increased by 5% to $525,000 as per the same Montreal Housing Market Report. The real estate market in Montreal is stable and is predicted to grow in the future, thanks to the city’s development and positive net immigration. If you are considering investing in a condo in Montreal, the value is likely to increase over time. Furthermore, buying a condo in Montreal is a very effective way to build equity that you can use to buy your next property or any business in the city.
4- How do people afford condos in Montreal?According to the latest National Bank of Canada report regarding house affordability, the minimum household salary required to buy a condo is $67,750. Condos are relatively more affordable homeownership options when compared to single-family houses. This is because they typically cost less and can be purchased by more buyers. The average price of the median condo is $385,000, as per the August 2020 Montreal Housing Marketing Report. Condos are often popular among first-time homebuyers due to the same reason. The first-time buyers in Quebec get incentives and prefer buying a condo at a low cost and interest as compared to a single house. Another reason is that investing in a condo is a very cost-effective way to build equity over time and buy a full house later by using that equity. Furthermore, Condos are also a very popular choice for retired people, as a condo community will often provide services specifically catered to their needs. Suppose you’re thinking of buying a condo in Montreal and are not sure about whether you can afford it or not. In that case, you can use the home affordability calculator or talk to a professional mortgage advisor for better guidance and bringing clarity on your decision.
5- What do I need to know about buying a condo in Montreal?Some of the important considerations when buying a condo in Montreal include the location of the condo. Whether you want to live in it or rent it out, it’s better to buy a condo near a commercial area that has quick access to the commercial buildings, offices, restaurants, banks and parks. Some other important considerations include;
- HOA monthly fees
- Freedom to renovate
- Whether you’re allowed to rent it out or not as per the rules
- Special Assessments (Constructions, plumbing, etc.)
- Mortgage rates
- After-sales services
- Choice of finishings
- Warranty protection