François Chicoine, real estate brokers for multiple units in Montreal
Buy your future home with an experienced broker
Buying a divided vs undivided co-ownership
In Quebec, unlike in other provinces, there are two types of residential co-ownership: divided and undivided. In Montreal, undivided co-ownerships can be found in certain areas such as Notre-Dame-de-Grâce, Outremont and the Plateau Mont-Royal. Divided condos are the most numerous in all areas of the island of Montreal.
Divided: The building is divided into fractions (% share). Each fraction includes one or more private portions (apartment, parking space, storage) for exclusive use, and a share of the common areas.
Certain spaces may be common areas for exclusive use (such as a balcony attached to the condo). Everything is governed by the declaration of co-ownership and the building's by-laws.
What we like:
- A minimum down payment of 5% and the possibility of financing with all lending institutions.
- The high number of potential buyers.
What we like less:
- High municipal and school tax bills.
Undivided: Purchase of a percentage of a building shared among several owners. A single cadastral number and a single property tax bill for all the units. Governed by an undivided co-ownership agreement.
What we like:
- Lower purchase price than divided condos.
- Taxes are generally lower than for divided condos.
What we like less:
- A minimum down payment of 20%, with mortgages offered only by Desjardins and National Bank.
- No right to repossess the unit if your undivided condo is rented to a third party.
Buying an income property in Montreal
For several reasons, buying a residential plex (2 to 5 units) is attractive for a future owner. Before highlighting the features of this typically Montreal type of housing, here are the lender's minimum down payment requirements:
Owner-occupant
Owner-occupant
Owner-occupant
Owner-occupant
Investor
Owner-occupant
duplex
triplex
4-plex
5-plex
2-3-4-plex
semi-commercial
5%
10%
10%
15-25%
20%
25-35%
Advantages:
- Fast mortgage repayment: in the case of a triplex, your rental income can cover 70% of your mortgage obligations.
- The eligible deductions (for the rented portions) are numerous: municipal and school taxes, insurance, repairs, interest and bank fees, professional fees.
- Financial leverage: the value of your plex will allow you to borrow for a future investment.
- Safe and steadily growing economic value: 4% per year in central Montreal areas.
Drawbacks:
- Tenant management: screening and credit checks, knowledge of leases and of the rules of the Quebec housing tribunal (Régie du logement).
- In-demand product: for the past 5 years, supply has not kept up with demand in central areas of the island. The number of available plexes is shrinking, partly because of conversions to condos.
- Aging building stock: most row plexes were built between 1910 and 1925. You need to plan resources for renovation and maintenance. However, these costs are tax-deductible.
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