It’s a trend that Canada’s biggest cities have been seeing for several years. Investors take on Vancouver mortgages and Ottawa mortgages on condo units in order to then turn around and rent them out, and pay off the mortgage while collecting a tidy profit at the same time. But, as prices on condos in these areas continue to rise, and show little signs of slowing down, investors are starting to look at other markets to buy investment condos and then rent them out to tenants. One area that’s starting to see a lot of this activity is Montreal.
Jean-Francois Voyer, president of Construction Voyer, the company that’s currently building the Logix complex on the Laval des Rapides site says, “We decided to go after two types of buyers. It opened the door to a larger market for us. I see more and more developers selling to investors that want to rent them out.” Voyer estimates that within the Logix project alone, 60% of the 440 units within the building will be sold to investors, while only 40% will be sold to those who actually want to live in them as their primary residence.
It’s a trend that, while seen in Canada’s larger urban centres, has been slow to catch on in Montreal. In the Canada Mortgage and Housing Corporation’s 2011 condo survey, 25% of Vancouver condos were purchased as investment units, while 22% of Toronto condo units were purchased and then rented out. That same year, only 10% of condo units were purchased with the purpose of turning them into an investment property. But, as investing in these big cities starts to make less sense for investors who are trying to make as much profit as possible, they’re starting to move to the suburbs and to other cities such as Montreal and Halifax – a city that’s about 10 years behind the rest of Canada when it comes to condos, anyway.
“You’re bumping up against a ceiling in Toronto and Vancouver, and that’s why the money’s starting to shift” says Don Campbell, president of Real Estate Investment Network of Canada in B.C. And not just to other major Canadian cities, either – but the smaller ones that reside just outside of them. More investors are starting to take out Oakville mortgages for tenants that may not mind the commute to Toronto, and smaller cities outside of Vancouver, such as Burnaby, are also seeing more properties scooped up for investment purposes and being targeted towards commuters who can’t afford the high prices of the big city.
Montreal for the time being, seems to be the city that’s benefiting the most from it. In just under a year, the amount of condos being purchased as investment properties has doubled to 20%.
