The advantages of renting out your condo

Montreal is a great place to own income property. The Montreal real estate market offers many options for prospective investors in all price ranges. A good investment condo in Montreal can be purchased for as little as $200,000.

Besides the obvious advantages of having a steady flow of income and building your equity, there are several benefits to buying a condo as an investment property and renting it out.

• Condos generally appreciate in value at a rate which is usually higher than the inflation rate
• Finding a renter for a condominium is relatively easy in a popular downtown area
• As a landlord, there will be a minimal amount of maintenance and upkeep as many of the management and maintenance problems are usually handled by the Condo Association
• Common areas and amenities, such as swimming pools, tennis courts and courtyards are usually fully maintained by the Condo Association
• Many expenses related to managing your rental property may be deducted from your income, including interest on mortgage payments, depreciation, repairs, a home office used for the purpose of managing the property, insurance, legal and professional services

However, owning an income property comes with its share of responsibility and leg work. To be a responsible landlord and avoid any pitfalls you should :

• Make sure you are familiar with local landlord and tenant laws (in Quebec you can visit the Régie du Logement website)
• Ensure your leases are legal and thorough
• Make sure your property is in good shape and conforms to the laws governing rental properties
• Take the time to call potential tenants’ references and run credit checks
• Inspect your condo at least twice a year
• Create an emergency fund*

*An emergency fund will ensure that you can pay for unexpected expenses that are not covered by insurance and may help you cover costs if there is a vacancy between renters.

Other things to keep in mind:

• Different condominium projects have different rules when it comes to renting out private portions so it is important to verify those rules prior to making a purchase.
• Consider whether you want to rent your condo unfurnished, partly-furnished or fully furnished. A furnished apartment may be more appealing because you can usually charge higher rent for furnished condos; potential tenants can save money on furniture and you will also be able to deduct a portion of the cost of the furniture as an expense. However, renters looking for a fully furnished condo tend to belong to a niche market of tenants who prefer to rent short term. Tenants who buy their own furniture may stay longer since they have made an investment and moving out again could be complex and expensive.
• Whether furnished or unfurnished, you should do an initial walk-through with your new tenant, noting together the condition of the condo and any furniture and items in it that belong to you.
• Finally, talk to professionals that have experience with rental real estate. Ask for their advice on what to do, and what not to do. A real estate agent or an accountant that specializes in rental real estate will be able to advise you on how much you should charge for rent and give you an objective point of view on the pros and cons of owning an income property.