Investor · Brossard, Québec · Member since 2016 · 11 posts · 1 vote
I estimated 5% property management, 10% for maintenance & 10% for capital expenditure in Montreal, Quebec, Canada area; and that would makes most deals a bad deal. I'm wondering what percentage of rents do you all estimate for maintenance and capEx for plexes that are like 40-60 years old? Do you estimate lower % for newer plexes (20-40 years old)? Would really appreciate to hear from your perspective!
5% property management seems on the low side, depending on the type of manager you'd take. The maintenance and capex figures seem ok to me, however that depends a lot on the condition of the plex. If it was fully renovated before you buy it, you can lower the capex requirements for a while, but honestly the likelihood of finding a great deal on a fully renovated plex is really low.
I would say that the Montreal market is a tough one, mostly because of the Régie du logement keeping the rents down compared to many other places. You have to look hard to find the deals :)
Investor · Brossard, Québec · Member since 2016 · 11 posts · 1 vote
9y
@Philippe Laurin Thanks for your feedback. I estimated 5% property management just to be on safe side because we plan to manage ourselves. Would 5% still be low in that case? Yes, it's true that Régie du logement is keeping rents low and makes it hard to find a good deal for fully renovated plexes. I'm hoping I would be able to find a decent rental income property (with cash flow) to start with. By the way, how much cash flow do you estimate? In Brandon Turner's webinar for plexes, he is estimating $100 cash flow for each unit. I'm thinking that's almost impossible for Montreal or even South-Shore market.
@Chris Walters, no, capex stands for Capital expenditure. It's meant to be for any expenses that could help increase the property values; such as roof, windows, bath, kitchen & etc.
Rental Property Investor · Laval, Quebec · Member since 2014 · 104 posts · 44 votes
9y
@Karen Ng, if you plan on managing yourself then 5% is fine, but keep in mind that it's always possible that for some reason (moving away, disability, too much work, etc) you would have to hire a management company, so it's good to include that number in your calculation.
As for finding deals, 99% (if not more) of what's advertised on the market won't cash flow, unless you can find ways to increase the revenues, which is not always possible. Otherwise, plexes in nearby smaller cities have better chances of cash flowing from the start, but the potential for appreciation is not as good. Trois-Rivière is a good example, the rent vs property price ratio is pretty good, but the city seems to have very little in terms of property appreciation in the last few years.