Invest in a second home

Are you considering buying a second home to enjoy nature in the region or to make it profitable by renting it out? The soaring prices throughout the province and the constraints related to rental may, however, make you hesitate. Two experts enlighten us.

Emmanuelle Mozayan-Verschaeve
special cooperation

The pandemic has convinced some to leave to live in the regions, while others have kept their accommodation in town, but have bought a chalet. Prices then soared almost everywhere in Quebec and one wonders if investing in these circumstances is worth the effort.

“In my opinion, it’s always a good time to invest, but you have to be able to sniff out opportunities and always keep an eye open,” thinks Mikael Lacroix, residential and commercial real estate broker — Groupe Sutton-Immobilier Estrie, affiliated with Barnes International.

He recommends starting by clearly identifying your needs (vacation home, retirement project, rental investment, etc.), determining your budget and doing business with a real estate broker in the region concerned, because he has a good knowledge places. “It is important that there is a relationship of trust between the person and the broker, he believes. You can ask him to send you alerts corresponding to your searches and he must be able to advise you objectively on the properties that interest you. He must also let you know if he sees an opportunity that might be suitable for you. »

Provide the funds

It’s best to get a mortgage pre-qualified to speed up the buying process and be able to make an offer quickly. The mortgage institution will require a minimum 20% down payment to finance a secondary residence in addition to verifying your debt ratios based on your current debts and your salary.

“Even if your goal is to rent the property and you demonstrate that it’s already rented, 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’s too unequal, underlines Mikael Lacroix. In the case of a long-term rental, if there is already someone in the dwelling with a lease, the bank may consider the income from the lease. »

In addition to basic needs and budget (mortgage, taxes, insurance), other factors should be taken into consideration before making your choice.

Check rental rights

One of the most important factors concerns the location of the property. Mikael Lacroix suggests doing a market study, then making a choice between a long-term or short-term lease. In the first case, there is no municipal restriction, while in the second, it is not authorized in all sectors.

It is therefore important, before buying, to inquire with the city about the possibility of short-term rental, because even if the property you are looking for is located in a tourist area, at the water’s edge, near national park or ski mountain, there is no guarantee that rentals will be permitted. If this is the case, you must register with the Corporation de l’industrie touristique du Québec (CITQ), which will assign a classification (number of stars) based on various criteria, including the location of the property, the number of rooms, size of beds and interior and exterior equipment (dishwasher, number of pillows, fireplace, kayak, spa, etc.). This classification will make it possible to establish a rental price and to display the property on Chalets au Québec, for example.

In addition, you should know that it is mandatory, since 1^er May 2020, to register with the CITQ for short-term rental. This registration is equivalent to an acquired right. However, in the event of a neighborhood complaint, the municipality can prohibit your activity.

Manage yourself or not?

Obviously, a second house involves additional maintenance constraints which are increased tenfold if you rent it. “An outdoor hot tub is in high demand, but you will need to clean it between each occupant. It requires more management and you have to establish the efforts that you are ready to put in while remaining realistic. For example, if the chalet is located 1h 30min drive from your home, it may become difficult to go there frequently to clean between each client,” notes Mikael Lacroix.

Some companies specializing in rental management offer concierge services and housekeeping for generally 10% to 15% of the income generated. This is the case of the company Hôtel à la Maison, which was created following 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.

The company currently manages 160 short-term rentals and more than ten units it owns on the banks of the St. Lawrence. “Our clients give us full or partial management. You should know that it takes an average of nine hours of work per week to manage a house for short-term rental, he specifies. We also offer an assistance service to investors to choose the geolocation, the type of house. »

Mr. Carrier recommends taking professional quality photos before marketing on different platforms such as Airbnb or Booking. “Renting is quite a business. It’s run like a business, on a more or less large scale, depending on the revenues generated, since they vary considerably depending on the services, the location and the occupancy rate. Generally, everything goes well with the clientele, and I have very rarely experienced the horror stories that we sometimes hear about. You just have to avoid renting to large groups by limiting the number of people allowed,” he advises.