Montreal detached rental: do C$1.228m and C$8,589/month really work?

[hana.slate]

One approach is to confirm the advertised 8.4% gross yield and then examine expenses. The other is to challenge the rent first, because the rest of the calculation means little if C$8,589 a month is not achievable.

I have spent about 70 days looking at this Montreal deal: a 1-bed detached home priced at C$1,228,000. The property seems sound, and I have budgeted for empty periods, a manager, normal upkeep and a major future repair. Even so, the broker’s figure leaves out a good part of the owner’s outgoings.

For a concrete example, heating or exterior maintenance paid by the owner could make monthly cash flow much less even than the annual total suggests. Which item would you verify first here—property tax, insurance, utilities, management charges or tenant turnover? I am also interested in the net return people would require, assuming the rent can be supported by actual comparables or a lease.

 

[inez.sky]

The gross calculation works: C$8,589 a month is C$103,068 annually, or about 8.4% of C$1,228,000. I’d focus first on property tax and a real insurance quote, then clarify who pays heating, snow removal and other exterior upkeep. On a detached home, those items can turn a neat spreadsheet into uneven monthly cash flow.

 

[FirstBrick]

Before debating the acceptable net yield, how firm is that C$8,589 figure? Is it supported by an existing lease, comparable long-term rentals, or merely an asking-rent estimate? For a 1-bed, the rent assumption is doing nearly all the work. Also, does “70 days” mean the property has been listed that long, or that you have spent 70 days analysing it?

 

[frame.grand]

I’m less concerned about a routine vacancy allowance than the durability of that unusually important rent assumption. One tenant leaving could mean downtime, management work, cleaning and leasing costs all at once. I would model a materially lower replacement rent as well as vacancy. If the deal only clears your target at C$8,589 every month, the apparent yield offers less protection than it suggests.

 

[FirstBrick]

Agreed on testing the rent, though acquisition costs and operating costs should be kept separate so the net yield remains understandable. I’d run three columns: expected rent, lower rent, and lower rent plus turnover. Then apply the same verified taxes, insurance, management and maintenance to each. After that, add financing separately at several possible borrowing costs; leverage can reverse the conclusion even when the property-level return looks acceptable.

 

[paintsAndJournal]

The practical next step is to replace every estimate you can: obtain the current property-tax figures, an insurance quote for the intended rental use, utility history, a clear list of tenant-paid costs, and inspection-based repair priorities. Then ask for evidence supporting C$8,589/month. I wouldn’t choose a required net yield until those numbers are known; the gap between the 8.4% headline and the verified net figure is the real sanity check.