Montreal condo investors have negative cash flow, report finds

TORONTO A report by Canada Mortgage and Housing Corp. suggests a majority of landlord investors who bought properties in large, highrise condominium buildings in downtown Montreal are not collecting enough rent to recoup their operating expenses.

The national housing agency estimates that investors who made a 20-per-cent down payment on their properties are spending more on mortgage payments, condo fees and property and school taxes than the amount they receive in rental income.

The report suggests the owners of 75 per cent of the 375 rented condominiums it examined from Quebec’s property listing service, Centris, experienced negative cash flow. It found that in this scenario, operating expenses on average, exceeded rent by $385 a month.

CMHC noted the conclusions were theoretical and could vary due to a number of other factors that were not taken into consideration, including whether the owners put down a down payment larger than 20 per cent or if the unit was purchased with cash.

CMHC economist Francis Cortellino, the report’s author, says the ultimate hope for these investors is that their costs would be recouped in the resale of the condo, if market conditions continue to tighten and favour sellers.

The CMHC report also found the proportion of investors (56.5 per cent) in the very large high-rise condo apartments in downtown Montreal, what the agency categorized as new buildings of 300 or more units, was higher than in other condo buildings (30 per cent).