Thank you Willyboy for your answer!
When you write "...that's why if you look at the cash flow numbers you find they are not good.", may I ask you from which report you are referring to for the cash flow numbers?
I am looking to invest in a rental property to have positive cash flow every month, it's my priority before the potential value increase of the property.
Hi Xavier,
No worries. I didn't look at any report. All you need is some basic understanding of mathematics, common sense and some basic rental housing knowledge like property taxes, insurance, average rents (you can find them on CMHC website), maintenance costs, vacancy( CMHC website), property management, etc....
Your next best friend is a good online rental property analyzer to input the figures corresponding to those things above.
In Montreal and Quebec there's a very popular type of rental housing that doesn't exist in the other cities in Canada. It's called Plexes from 2 to 5 units. But because they have been very popular and in high demand for the last two decades they got highly inflated in prices and consequently the cash flow became negative if you use real expense numbers and not enhanced proformas. Typically in this type of housing a small investor buys say a duplex or 3 plex or 4 plex or even a 5 plex, lives in one unit and rents out the rest. And due to the fact that investors buy them to live in one of the units they pay sometimes a premium as they consider the whole structure as their own living place and the rest of units as a mortgage helper or a rental investment. Many of them also have a very beautiful curb appeal and in very good locations where they get snapped up quickly and hence the negative cash flow. Now if you manage them yourself and are a handy man as well the cash flow becomes a little positive but not everybody can do that. The potential for price appreciation is very good on the other hand as it has been before but you would have to wait until you resell say in at least 5-7 years so you can offset the negative cash flow if you're not self managing.
The other type of rental property like anywhere else in Canada is apartment buildings 6 units and up and they have better cash flow numbers due to the fact that they typically are used strictly as rentals and have more units. However because of rent control you won't see high positive cash flow.
REIN is a very good site for education. And I recommend you check out the Club d'investisseurs immobiliers du Quebec. They are very similar to REIN but in Quebec only. REIN is Canada wide so if you'd like to invest out of Quebec REIN is good for you.
Research property analyzers as well and try to meet with a investor focused realtor to show you how to use a cash flow analyzer. Be aware though that some realtors use the numbers to input there in such a way to make the cash flow seem like positive so you have to get education on the realistic numbers to use and you probably can get that education at REIN or other clubs if you are in Quebec.