When buying a first home, it is important to consider all the options available.
The vast majority of Quebec households considering the purchase of a first property only consider the single-family option. However, the duplex, triplex or quadruplex alternative offers multiple advantages.
Here are some important elements to consider if you decide to embark on this adventure.
Becoming an entrepreneur
Buying a plex means becoming an entrepreneur. You will be a real manager, especially in terms of human relations, and you will be responsible for the harmonious cohabitation of all the occupants of your building and for meeting their individual needs. The administrative side of things will also be your responsibility (unless you hire a professional accountant).
If you have never owned a multiplex before, you should consult the administrative court to find out what your rights and obligations are as an owner. This will give you a clear picture of the various tasks you will have to perform in your future role as an owner. It will also allow you to determine if this is a role that is right for you or not.
Completing a financial analysis
Another aspect to consider before investing in a multiplex is to analyze your finances. Is your project financially viable? Don’t hesitate to consider various scenarios based on current interest rates, inflation costs and possible contingencies.
Because the financial evaluation of a real estate project is important to take into consideration, do not hesitate to ask for the help of your mortgage specialist. As an expert in the mortgage system, he will be able to advise you on the planning of your real estate project. We can refer you to very qualified specialists!
Learn about the neighbourhood
Understanding the neighbourhood is mandatory. The location of the building can make all the difference in the success of your real estate project. A building located in a growing area, close to services, will probably be more attractive to potential tenants than an industrial area.
Don’t hesitate to visit local businesses, ask about future municipal developments and walk the streets at different times of the day to get a feel for the area. You should never invest in a property without knowing its environment. Your REALTA broker can answer many of your questions.
Potential income… but not necessarily actual income!
You finally found a multiplex you’re willing to invest in, and the potential revenue it would bring in is more than enough? Be careful: potential revenues are not the actual revenues. They can give a false idea of the financial health of the building.
Instead, try to find out the current income of the building you are interested in. This is a much better indicator for your transaction than potential revenues. You will be able to better judge the price you want to pay for the building, based on its current situation and not its ideal situation.
In addition, if the analysis of the rents collected leads to the conclusion that they are below market value, this could be a good opportunity for you to increase your income when new tenants arrive. Some inexperienced landlords tend to underestimate the value of the rents they could collect.
Get the help of a real estate broker
Buying a multi-unit building is a complex operation. For it to be profitable, it is important to leave nothing to chance. That’s why it’s essential to use a real estate broker. At REALTA, our brokers are there to guide you, but also to protect you at every stage of the transaction.