Approximately 20% of condos available in the Greater Montréal area are currently being rented out by the owner. This trend can also be observed in suburban neighbourhoods around major cities and in rural municipalities. Not surprising since renting out a condo can be highly lucrative!
And yet, renting out a condo isn’t like renting out a house. If you’re interested in this form of real estate investment, read on to gain a better understanding of this field.
Read the Building Regulations: It Could Change Everything
Make certain renting out the condo is actually permitted before signing the purchase agreement. The building regulations may likewise stipulate that owners must occupy their unit for one or two years before turning it over to tenants. Furthermore, some buildings ban short-term rentals to protect residents from the possible irritants this activity may cause. Owning pets or smoking indoors may also be prohibited. All these restrictions may shrink your pool of potential tenants.
Determine How Much Rent to Charge
First, calculate your total ownership expenses: mortgage, monthly condo fees, insurance, school and municipal taxes. Ideally, the amount of rent you charge will cover all these costs (or most of them). You may be able to ask for more… or have to accept less. It all depends on the building’s characteristics, such as its location, proximity to mass transit, date of construction.
Address Property Damage
A tenant is responsible for repairing any deterioration to the unit unless they can prove it occurred through no fault of their own. Tenants aren’t normally billed for small holes in walls, scratches on the floor and other minor aesthetic issues. However, the co-owner must pay for damages to the common areas (lounge, terrace, gym, etc.) caused by their tenant.
Conduct a Background Check
Furthermore, carrying out a background check on your prospective tenant is recommended before signing a lease. This may include a credit check (you will need the person’s authorization) and their tenant history (if applicable) at the Tribunal administratif du logement du Québec. Don’t forget to confirm your tenant’s identity with photo ID. But remember, the law strictly prohibits, and punishes, any form of discrimination in the tenant selection process.
Manage Your Tenants to Avoid Conflict With the Syndicate!
Larger buildings are typically administered by an external property management company. Security cameras are also often installed throughout. The objective is to ensure a safe and pleasant living environment for all residents. Plus, many condominium building residents own the unit they themselves live in. They can therefore keep an eye out for disrespectful behaviour on the part of your tenant. You will be fined if, for example, your tenant doesn’t pick up after their dog in front of the building, is noisy, or smokes indoors despite a rule against it. You’re responsible for your tenant!
Ask a Broker for Assistance
Real estate brokers don’t just oversee the buying and selling of properties: some also take on rental properties. They’re in the best position to find good tenants, carry out visits, explain the condo’s advantages and ensure documents are signed properly. Don’t hesitate to give one a call!
Once you’ve started, you might discover that you’ve caught the income property bug and want to purchase more condominiums to rent out. Some people entirely earn their living from this type of investment. It might be the right fit for you!