1% in Montreal or surrounding areas?

[Rachel Leider]

Hi BP,

First post here. I am an accidental investor from Montreal, Quebec, looking to become a more deliberate one shortly!  I have been looking at listings locally in Montreal and surrounding areas and have not been able to find any properties that come close to the 1% rule.  Is anyone finding deals like this or should I be looking in other areas of the country? Thanks in advance!

[Roy N.]

@Rachel Leider

Welcome to BP!

Firstly these 1%, 2% "rules" are not really rules - but merely thresholds along a continuum ... or, more oft than not, measuring sticks for bragging rights.

More important than whether you're monthly rent roll is a certain percentage of your purchase price is the amount of cash flow the business generates out the other end.  While it generally follows that more cash-in implies more cash out, that is not always the case.  You could have two properties, one which satisfies your 1% rule and one that does not:  if the operating costs of the first are 70% and the latter 40%, the pricier property will produce more net income ... whether it is sufficiently more to warrant the price difference would need to be determined.

While guidelines such as 1%, 2% may be useful for initial triage, you should always carry out a full {discounted cash flow} analysis of a property before considering a purchase.