The Downtown Realty Team are a group of Real Estate Brokers who work almost exclusively in the Downtown Montreal area. These areas include the Downtown core, the Old Port or Old Montreal, the South West (Griffintown, Point St Charles, St Henry), Verdun, Westmount and the famouns Le Plateau which has been voted one of North America's trendiest neighbourhoods.

The fact that we work in a smaller area helps us acquire a more intimate knowledge of our areas of interest so as to better serve our clientele. We can, at a glance, know if a property is well priced or not, and more importantly if it will generate a good rental income in relation to the price.

There are two ways to turn a piece of real estate into a good investment.

1. Buy below market value

2. Make sure the lowest probable rental income provides a good return.

Sometimes , the former will necessitate a few renovations but not to worry, we have a qualified overseer in our team and work with good contractors who will ensure to deliver the best product for the best price.

Moving on from the purchase price, the most important aspect of the 'buy to rent' investment property is to ensure that you purchase a unit that will generate an interesting ROI (return on investent) .

The ROI must be calculated not on the price of the property but on the amount you have invested. It could be that you are in a position to purchase a property mortgage free, but the best ROI will come from a downpayment of roughly 30% and taking a 70% mortgage. Whilst this will not generate the best cashflow, the ROI isn't just calculated on the basis of how much you bring home on a monthly basis but also on how much of the mortgage you have paid.

A typical case scenario would be the purchase of a $300,000 condominium.

Downpayment : $90,000.00

Mortgage: $210,000.00 (25 year amortisation at 3% interest over 3 years)

Monthly payments are $995/month or $11,940/year.

Taxes are $2,600, School taxes are $450 and Condo (Strata) fees are $2,640

Rental income is $1,600/month ($19,200.00/year)

Your net income after all expenses is $1,570 so 1.7% so nothing to write home about.

However, the main gain is all the invisible income.

The property will go up around 3% per year so over 3 years, the capital gains on the property will be $9,000.00.

Over 3 years, your mortgage balance will go from $210,000.000 to $192,000.00 which is $18,000.00 increase in value of your equity.

Thats a total of $27,000.00 over 3 years so $9,000.00 annual growth to add to the $1,570.00 net profit on the rental.

The actual ROI is therefore $10,570.00 which, in percentage terms, is 11.7%.

Just so that we know that this is not a 'favourable' figure, it must be pointed out that generating a rental income of $1,600 for a property priced at $300,000 should be very easy to achieve in the current market. The 3% increase in value of the asset is a low average growth rate.

All these figures are open to greater scrutiny in any case.

These are the basics, but every model is different and whereas it is possible that in some cases, these figures will appear slightly inflated, most exemples will prove them somewhat conservative.

Whats more, if you are willing to wait until a good deal comes on the market, your ROI will be even higher.

If such investments are of any interest to you, please contact us by email or by phone. You may also fill in our inquiry form by clicking here

email : info@downtown4sale.com

Phone : 1 514 312 4233