Real Estate Investing in Quebec

Real Estate Investing in Quebec

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The nation of Canada seeing new growth. Thanks to a renewed commitment to international cooperation and a government that seems up to the challenge of navigating a strange, new world, people are flocking to the Great White North. Between 2015 and 2019, immigration to the nation saw an uptick of 26 percent. All those new faces will need a home. The only decision to make when investing in Canada is which province to set up shop. As you begin your search, don’t overlook the province of Quebec.

Table of Contents - Real Estate Investing in Quebec

Even in a country as sprawling as Canada, the province of Quebec is something unique. The expansive territory of Quebec stretches from the southern tip of the country almost to the northern border. It’s half a million square miles of diverse cultures and languages, territory and landscapes. Thanks to a thriving economy, Quebec is also a great place to build your real estate investment portfolio into something powerful and dynamic.

Real estate investors hoping to get a foothold in the Quebec real estate market don’t need to tromp up and down the tundra to find the right deal, however. Investing in Quebec real estate is just a matter of doing your homework and knowing where to strike.

How’s your French?

Most people outside of Canada think of the nation as something of a hybrid when it comes to language. The general assumption is that the nation is split between native English speakers and native French speakers. That’s not accurate. Approximately 7.2 million Canadians speak French, but the country is home to nearly 40 million people. The truth is that the French language is only prominent in one province: Quebec. Considering that there are around 8.4 million people who call Quebec home, it’s safe to assume that a big chunk of the province’s population speaks at least a little bit of French.

So many French-speakers call Quebec home that the province’s official language is French. It’s the only province in Canada that can make that claim. The locals speak a dialect known as Québécois (that’s keh-beh-KWAH). While you need not learn a whole other language just to do business in Quebec, it’s not a bad idea to know a variety of conversational phrases.

Think strategically. Imagine you have a client or customer who speaks French as their primary language. When it’s time for them to casually discuss a detail or an aspect of the deal, they’ll do so in French. When that happens, it is to your benefit to know some Québécois.

The ex-pat presence

If French isn’t your strong suit, and you’re not interested in learning, you can still make a go of it in Quebec. The province is hugely inviting for ex-pats looking to build a life in a new country or just retire abroad. In particular, Montreal is one of the most popular cities in the nation for ex-pats who move to Canada. If you can establish yourself as the person to help newcomers navigate Montreal’s housing market, then you could set up quite the cottage industry.

A commitment to low-cost housing

Before you dive into the Quebec housing market in any capacity, you should know that the region has a genuinely unique housing sector. First, the province remains committed to providing affordable homes to every one of its citizens. That dedication makes housing costs dramatically different in Quebec than anywhere else in Canada. For example, the average value of a three-bedroom home in a desirable neighbourhood in Toronto is twice the price of the same house in virtually the same neighbourhood in Montreal. That’s how it’s been for the last two decades, thanks to some fancy tax maneuvering that makes it very enticing for housing developers to build in the province. Though the actual ins and outs or complicated, Quebec’s housing philosophy boils down to two simple rules: make it cheap to build new homes and keep the process free of red tape.

The second aspect of the Quebec housing market that’s worth registering is its elasticity. An “elastic” market is one whose supply rises quickly to meet the demand. For example, if a million people moved to Toronto tomorrow, zoning restrictions and guidelines would hamper new construction. The result would be skyrocketing rental and home prices. That impact wouldn’t be felt in Montreal to nearly the same degree, because builders have the freedom to increase the number of housing units to meet the demand. In other words, if a million people move to Montreal tomorrow, six months later, a million new places to live would be constructed, and the prices would even out.

For real estate entrepreneurs, the region’s commitment to affordable housing means that investing in Quebec takes a comprehensive knowledge of the market and a clear idea of what you’re hoping to gain from your investment.

Pick your location strategically

If you have the luxury of choosing your housing market when investing in Quebec, you’ll likely find the province filled with enticing possibilities. Year after year, cities throughout Quebec rank among the loveliest places to live and work in the country. All of the province’s major cities — Quebec City, Ottawa and Montreal — are clean, friendly and welcoming.

That said, these three areas have their specific real estate strengths and weaknesses. Depending on your long-term real estate investment goals, you should pick your province carefully. Before you put capital down on the property in any of Quebec’s major cities, it’s crucial to get a firm idea of the real estate portfolio you want to build.

Look for “tight” markets

To determine the health of a real estate market, experts compare the number of sales in a region to its number of active listings. The numbers are plugged into an equation that yields a number known as “months of inventory.” This number is then assessed on a scale of one to ten. Provinces with low months of inventory are considered a seller’s market. That is, homes will sell at higher prices. When a region has 8 to 10 months of inventory, it is deemed to be balanced. Areas with months of inventory that exceed 10 months are considered buyer’s markets.

In Quebec, about half of the seller’s markets are located in Montreal on the Western half of the Island of Montreal. So, while the province of Quebec is renowned for its benevolent housing market, the competition for reasonable prices is heating up rapidly, and it just may be the perfect time for a new investor to break into the scene.

Montreal

The most populous city in Quebec, Montreal, is home to nearly 2 million people, and that number is growing rapidly. The city’s robust housing market is expected to continue to swell over the coming years right alongside the city’s economy. New businesses and new families flooding into the city make it a prime spot for real estate investment, especially if you’re interested in investing in new construction.

The average income of a Montreal citizen is a little over $50,000 a year, which is plenty of money when you consider that the city’s housing is so inexpensive. The average rent on an apartment runs about $935 a month, plus utilities, and the average cost of a home is around $314,000. By the time people start a family, the combined income has jumped to roughly $70,000, which makes both the city and the surrounding suburbs an excellent place for prospective real estate entrepreneurs who want to sell high-value homes.

The suburbs surrounding the city run the gamut in terms of housing cost. Montreal’s upper-crust neighbourhoods can see the property go for as high as $1,607,439. On the other end of the spectrum, homes can also sell for as low as $188,000. That makes Montreal a good place for prospective real estate moguls operating on a smaller budget to get their foot in the door. Then, as you grow your investment capital, Montreal makes it easy to scale your investments however you want, either by purchasing more expensive properties or purchasing a higher number of mid-and-low level properties.

Montreal is also a fabulous place to build up a luxury housing portfolio. The city’s growing reputation as an international hotspot has caused the region’s luxury market to explode. As one expert put it, “Montreal has truly become a global city. And when you have global cities real estate tends to increase …” Neighbourhoods like Plateau-Mont-Royal, Outremont and the Gay Village are selling homes priced between $1 and $3 million.

Quebec City

Quebec City, also shortened to Québec, is something of a jewel within the Canadian landscape. First of all, it is stunningly gorgeous. A European feel permeates the city. There are cobblestone streets and several luxurious dining options. Quebec is also roughly one-third the size of Montreal, however, and its housing market isn’t known to be as vibrant.

The average resident of Quebec City pulls in just north of $46,000 a year. Fortunately, homes in and around Quebec City are more affordable than in Montreal. The rent runs around $970 a month, and the cost of an average home is just $266,500. All that said, if you’re investing in Quebec City’s real estate market, you may want not want to focus on the long-term rental market.

The primary attraction of Quebec City for those investing in real estate is the city’s thriving tourism industry. One section of the city, appropriately known as Old Quebec, is a gorgeous, walled-off neighbourhood that dates back to the 1500s. This incredible slice of history is a UNESCO World Heritage Site that draws thousands of tourists every year. Add to that the city’s booming nightlife, and you’ve got a vacation destination like no other. There’s a reason that Quebec City ranks consistently as Travel + Leisure’s Best City to Visit in Canada. It offers tourists a little bit of everything. Short-term vacation rentals in Quebec City are so popular that not even the outbreak of a worldwide pandemic could stop people from trying to visit the city.

In other words, if you want to jump into the vacation rental game, Quebec City is the place to do it.

Ottawa-Gatineau

Quebec is home to the national capital of Ottawa. The city has seen so much growth that it has essentially merged with the neighbouring city of Gatineau to form the Ottawa-Gatineau Metropolitan Area, also known as the National Capital Region. This thriving area of the country is home to 1.3 million people. It also just might be the best place for a real estate investor hoping to build a traditional housing portfolio.

The residents of the National Capital Region do reasonably well for themselves. The average family pulls in just over $100,000 a year. Of course, rent and home costs rise to match that increased income. The average rent on an apartment in Ottawa-Gatineau is about $1,000 a month. The average home price is $463,100.

The reason why the National Capital Region is great for an investor with an eye on the long-term rental or housing market is that home prices are exploding. The average cost of a home rose by 12 percent in 2019, and that trend is expected to continue.

Though the outbreak of the novel coronavirus, COVID-19, has slowed the housing market’s expansion, the Canadian government’s handling of the epidemic combined with the fact that Ottawa-Gatineau is chock full of essential government employees indicates that the National Capital Region should bounce back fairly quickly.

Summary

In short, Quebec can be an excellent province in which to start your real estate investment practice, given its robust urban areas and low prices. To meet with other Quebec real estate investors and discuss the perks and pitfalls of making Quebec a part of your investment portfolio, consider joining the Real Estate Investors Club of Quebec.

Real Estate Talk with Montreal Quebec Investors


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Scott Dillingham

Scott Dillingham

I have been investing and lending to real estate investors for nearly 10 years now. After thousands of successful deals between flips, rent to owns, student properties and commercial assets I have developed a deep knowledge of real estate investments and have a passion of sharing this information with the world! If your looking for a lender who specializes in rental property financing you're going to want to connect with me at team@lendcity.ca.