2% deals possible in the Montreal area?

Question

Hi!

I've been lurking around BP for the past few weeks/months. I keep seeing references to the 2% rule (monthly income vs purchase price), and I'm wondering if this it's possible to find such deals in or around the Montreal area. We own a 4plex in Hochelaga, our rents are at the very high end for the area, and we're still slightly below the 1% mark. Basically, I would have to double the rents to hit 2%, which is impossible. Such rents would be possible if we were downtown, but then the price of the property would also be double.

I have been looking at deals on MLS for 5-20 units, and most are well below the 1% mark. I'm guessing that part of it is due to the Régie du logement preventing rents from going up too much.

At this point I'm wondering if it's possible at all to even get close to 2% in this area. Anyone has seen such deals? I'm looking for buy-and-hold deals, most likely those which require a good make-over.

Thanks for any tips! :)

Erich Schmitt · Answer

Hey guys,

I've been looking for a few months on MLS here in Victoria, BC, and rarely do I see ones where the annual the gross rent is equal to 10% of the asking price. Meaning it's rare to see the monthly gross rent = to 0.8% of the price! So you're not alone. Achieving numbers like they do in the US is really hard. Here on the west coast practically impossible. Well, nothing's impossible, but in 8 months of looking at a lot of listings, I've rarely seen any beating 0.8% here! :(  And you guys have it better with CAP rates out east according to CMHC. Good luck!

William Johnson · Answer

Philippe I know  that you can get good deals here but you have to network like a mad man! You also need to be persistently investigating deals and making offers. PM me if you want to discuss further.