Montreal landlords face condo rent losses
TORONTO — A report by Canada Mortgage and Housing Corp. suggests a majority of landlord investors who bought properties in large, high-rise 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.
Last month, the Greater Montreal Real Estate Board reported condo sales were up 22 per cent year over year, with the median price for a condo up four per cent to $265,000.
The CMHC report also found the proportion of investors (56.5 per cent) in the very large highrise condominium apartments in downtown Montreal, what the agency categorized as new buildings of 300 or more units, was higher than in other condominium buildings (30 per cent).
It made this conclusion by looking at property assessment bills, and whether they were sent to the actual condo units or to a different address.
Resale of the units in the newer buildings within one year was also higher (7.2 per cent) than in the older buildings (1.8 per cent). While the percentage of sales resulting in a loss were also greater in the newer buildings (15 per cent) than in the older buildings (five per cent).