Rental deal in Montreal: C$864,000 purchase, C$4,226/month — sanity check

[rhea.holt]

I’m assessing a 5-bed duplex in Montreal at C$864,000, with expected rent of C$4,226/month. That gives a headline gross yield near 5.9%, but the margin looks much thinner once I allow for vacancy.

My conservative model uses eleven months of rent and includes management, routine maintenance, plus a reserve for one larger repair. The building appears sound, but I’m still worried the repair allowance is light. Which local cost am I most likely underestimating—insurance, property tax, turnover, or something else? What net yield would justify the risk for you?

 

[PrimeReed]

Eleven months gives you C$46,486 annually, or about 5.4% of the purchase price before any operating costs. I’d obtain the actual property-tax figures and a property-specific insurance quote rather than estimating either. Then stress-test one major repair occurring alongside turnover. At this gross yield, a modest error in expenses can erase much of the net cash flow.

 

[lila_escrow]

Vacancy is worth testing, but the C$4,226 rent assumption concerns me more. Is that amount supported by signed leases, or is it the rent expected after purchase? The model also needs owner-paid utilities, management and the actual financing terms.

I would first calculate the duplex return without debt, then run a few financing-cost cases. Even if self-management is the initial plan, include a management charge so the result does not depend on free labour. Once those inputs are fixed, the vacancy and repair stresses will show whether the 5.9% headline yield leaves any usable margin.