Real Estate Talk:
About duplexes

The advantages and obligations of owning a duplex

By Joseph Marovitch

Available duplexes in Westmount and NDG are limited. There are currently 18 duplexes for sale on Centris in NDG. There is one duplex for sale on Centris in Westmount. Between January 1, 2019 and December 11, 2019 there have been 86 duplexes sold in NDG and seven sold in Westmount.

Demand for duplexes in these areas is high and supply is short. Those who own them do not want to sell because in today’s market, income properties are commodities like gold. If the income from a duplex is covering expenses and/or providing profit after all expenses, it is like a guaranteed bond. On top of the income is the capitol growth. The value of the building itself grows and the owner can borrow against the building by refinancing or sell at a profit with a reduced capital gain tax, though I do not recommend selling unless you need the cash or want to buy bigger.

If the income from a duplex is covering expenses and/or providing profit after all expenses, it is like a guaranteed bond.

Space is limited on the island of Montreal as demand grows. Montreal is experiencing a growing economy and a housing shortage. Eventually, it will be very costly to live on the island. This will cause a larger movement to the suburbs where prices will increase as well.

For now, if you own a duplex, keep it. If you want to purchase a duplex, move quickly and offer your best price because there is competition. As duplexes come on the market in NDG and Westmount, they are snapped up. We have never had so many multiple offer situations.

The wonderful advantage of owning a duplex or triplex is the income and capital gain however there are obligations the owner must adhere to. Owning income property means being responsible for tenants and maintaining the property. If the landlord, in the lease, promises to provide appliances or a service, the appliances must be in working order. If the appliances break due to no fault of the tenant, the landlord is required to repair or replace the appliances in a timely manner. If the landlord is providing and controlling heat to the units in the building and the unit is cold, the landlord must adjust the heat. If the landlord owns a duplex and is renting the upper and lower, it is partly the responsibility of the landlord to ensure each tenant has peaceful use of the premises. If services such as snow removal or grass cutting are included in the lease, the landlord must ensure the service is provided.

Should disagreements arise between tenants or between tenants and the landlord, that cannot be resolved through the discussion, both tenant and/or landlord can contact the Régie du logement.

Residential income property, except for vacation property meaning monthly leases or leases that are shorter than six months, fall under the jurisdiction of the Régie du logement. The Régie is the governing body that protects the rights of both the landlord and the tenant.

‘Owning income property is a big responsibility but well worth the effort if the property is purchased at the right price in the right location.’

In disputes over noise, rent increases, renovations, unpaid rent, services not provided that are promised in the lease, either tenant or landlord can open a file with the Régie. The Régie will take the issue under consideration, investigate the situation and provide a remedy through a judgment that is considered law.

Owning income property is a big responsibility but well worth the effort if the property is purchased at the right price in the right location.

Régie du logement
5199 Sherbrooke E, Suite 2360
Montreal, Quebec
H1T 3X1
514 873-2245

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Have a great week and happy holidays!

Next article: Negotiating in a sellers market

State of the market

In a recent article published in the Gazette, according to the Canadian Mortgage and Housing Corporation (CMHC), the number of homes for sale over the last fifty months has diminished. Demand is growing but the supply is not there. As far as the CMHC is concerned, the Montreal market is over-heated. Reasons the CMHC believes to be causing the low inventory are people living longer and seniors are not ready for retirement homes.

The effects, stated in the article by a CMHC economist, are less new construction but more rental properties will be built to supply demand for space to live. It is also stated that owners will spend more on renovating their current home.

‘Economics 101, low supply and high demand equals rising prices. That sums up the Montreal real estate market.’

Factors not mentioned by the CMHC but playing a significant part in determining where the real estate market is heading, is space. Montreal is an island with less and less space to build. Montreal is also an international target for foreign investors who see the city and the province as excellent locations to place money from other countries. Money is relatively safe in Quebec and has the added value of being invested in a growing real estate market where value will increase for the foreseeable future barring factors such as terrorism or politics.

Other factors causing a snowball-rolling-down-a-hill effect is owners will not sell if they must spend more to buy, plus why sell if your property is only going to grow in value.

Economics 101, low supply and high demand equals rising prices. That sums up the Montreal real estate market.

Yet sales are occurring in a seller’s market. Investors are investing for the future and those who can afford it are competing for homes and condos. Sellers who have owned their property for many years are experiencing major gains. If you are downsizing, relocating or want to invest in real estate, this is your market. Sellers will gain and investors will avoid paying much more in the future.

Image: Andrew Burlone

Read also: Other articles by Joseph Marovitch