I’m assessing a 3-bed coastal home in Montreal at C$1,904,000, with expected rent of C$9,654/month. Twelve months produces the advertised gross yield of roughly 6.1%, but my model uses eleven months of rent and includes management, routine maintenance, vacancy and one larger-repair reserve. The building appears sound, though maintenance could change the result materially. Which Montreal cost am I most likely understating—property tax, insurance, turnover or something else? I also suspect my repair reserve is light. What net yield would justify the risk for you?
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Rental deal in Montreal: C$1,904,000 purchase, C$9,654/month — sanity check
- Thread starter FriendlyLens
- Start date
Using eleven months gives C$106,194 before any expenses, so the conservative gross yield is already closer to 5.6% than 6.1%. I would focus first on confirmed property-tax and insurance figures rather than estimates; either can materially narrow the margin. Does the C$9,654 rent exclude every utility and exterior-maintenance cost, and is it based on an actual tenancy or an asking-rent assumption?
gardensAndPath
Landlord
I’d worry less about averaging vacancy and more about concentrated turnover. With one 3-bed tenancy, a vacancy means zero rent while cleaning, repairs and management work may arrive together. A single larger-repair allowance can also hide the timing problem: several items could come due in the same year. Model that downside alongside financing costs, not just as a smooth annual percentage.
lila_miles
Buyer
I’m not convinced a fixed net-yield target answers this by itself. A seemingly acceptable yield can disappear if financing resets higher or water exposure makes insurance and exterior upkeep expensive. Get property-tax and insurance amounts tied to this specific home, list every owner-paid service, and price separate reserves for routine work, turnover and major components. Then stress-test eleven months’ rent plus a major repair in year one. If the deal only works when those costs stay unusually low, the 6.1% headline is doing too much work.