Invest in a second home

Are you thinking about buying a second home to enjoy the nature in this region or make it profitable by renting it out? However, rising prices across the province and rental restrictions may give you pause. We are enlightened by two experts.

Published at 12:00

Emmanuel Mozayan-Vershaev

Emmanuel Mozayan-Vershaev
special cooperation

The pandemic forced some to leave to live in the regions, while others kept housing in the city, but bought a chalet. Then prices rose almost everywhere in Quebec, and the question arises whether it is worth investing in these circumstances.

“In my opinion, this is always a good time to invest, but you have to be able to look for opportunities and always keep your eyes open,” says Mikael Lacroix, residential and commercial real estate broker – Groupe Sutton-Immobilier Estrie, affiliated with Barnes International.


PHOTO CREDIT BY MICHAEL LACROIX

Mikael Lacroix, Residential and Commercial Real Estate Broker – Groupe Sutton-Immobilier Estrie

He recommends starting by clearly defining your needs (vacation home, retirement project, rental investment, etc.), determining your budget, and doing business with a real estate broker in the area, because he knows the places well. “It is important that there is a trusting relationship between a person and a broker,” he says. You can ask him to send you alerts relevant to your searches and he should be able to objectively advise you on the properties you are interested in. He should also let you know if he sees an opportunity for you. »

Provide funds

It is best to get a pre-qualified mortgage loan to speed up the buying process and be able to make an offer quickly. The mortgage institution will require a minimum down payment of 20% to finance a second home in addition to checking your debt ratios based on your current debts and your salary.

“Even if your goal is to rent out a property and you demonstrate that it is already rented out, most financial institutions won’t take anything for granted when it comes to short-term rentals. [moins de 30 jours, c’est-à-dire les week-ends ou à la semaine], because it is too uneven, Mikael Lacroix emphasizes. In the case of a long-term lease, if the dwelling already has someone who is renting out, the bank may take into account the rental income. »

When renting, it is important to set aside a budget for contingencies and be aware that annual insurance costs more for short-term rentals than for full-year rentals with rentals.

Mikael Lacroix, Residential and Commercial Real Estate Broker – Groupe Sutton-Immobilier Estrie

In addition to basic needs and budget (mortgage, taxes, insurance), there are other factors to consider before making your choice.

Check tenancy rights

One of the most important factors is the location of the facility. Mikael Lacroix offers to study the market and then make a choice between long-term or short-term rentals. In the first case, there is no municipal restriction, and in the second case, it is not allowed in all industries.


PHOTO MARCO CAMPANOSI, PRESS

Mandatory because 1uh May 2020, registration with Québec Tourist Industries Corporation for short term chalet rental.

Therefore, it is important to check with the city about the possibility of short-term rentals before buying, because even if the property you are looking for is located in a tourist area, at the water’s edge, next to a national park or a ski mountain, there is no guarantee that the rental will be allowed. In this case, you must register with the Tourist Industry Corporation of Quebec (CITQ), which will assign a rating (star rating) based on various criteria, including the property’s location, number of rooms, bed size, and interior and exterior equipment (dishwasher, number of pillows, fireplace, kayak, spa, etc.). This classification will allow you to set the rental price and list the property, for example, on Chalets au Québec.

Also, you should know that it is required, since 1uh May 2020 to register with CITQ for short term rentals. This registration is equivalent to an acquired right. However, in the event of a complaint from neighbors, the municipality may ban your activity.

Manage yourself or not?

Obviously, a second home comes with additional maintenance restrictions that increase tenfold if you rent it. “The outdoor hot tub is in high demand, but you will need to clean it after every visit. This requires more management and you must set the effort you are willing to put in while remaining realistic. For example, if the chalet is 1 hour and 30 minutes away from your home, it can become difficult to come there often for cleaning between each client,” notes Mikael Lacroix.

Some rental management companies offer concierge and cleaning services, typically for 10-15% of the income generated. This is the case of Hôtel à la Maison, which was created after a bad experience. “We were not satisfied with the service we used for our properties because we found it incomplete, so we decided to launch our own service for short-term rentals,” says Michael Carrier, general manager of Hotel at Home.


PHOTO MARCO CAMPANOSI, PRESS

Michael Carrier, General Manager of the Hotel à la Maison

The company currently manages 160 short-term rental properties and more than ten of its own apartments on the banks of the St. Lawrence River. “Our clients trust us with full or partial management. You should know that running a short-term rental home takes an average of nine hours a week, he elaborates. We also offer a service to help investors in choosing a geolocation, type of house. »

The real estate market is overheated, before buying it is necessary to consult with experienced people in this field.

Michael Carrier, General Manager of the Hotel à la Maison

Mr. Carrier recommends taking professional-quality photos before marketing on various platforms such as Airbnb or Booking. “Renting is a business. It operates like a business, on a more or less large scale, depending on the revenues it generates, as these vary considerably by service, location, and occupancy. In general, the clientele is all right, and I have very rarely encountered the horror stories that we sometimes hear about. You just need to avoid renting for large groups by limiting the number of people,” he advises.