Our city and province have always been an attractive destination for local and foreign investors due to its vibrant culture, stunning landscapes, and growing economy. However as the landscape of the real estate market in Quebec changes, Revenue property owners are now asking themselves if it is a good time to cash out and sell their revenue property or hold on for a little longer. Prospective sellers must navigate their thoughts properly and consider all obstacles and factors when making a decision.
Our Opinion on the matter is as always, like double sided tape. If you are in a tough financial situation, or need additional liquidity to make what you believe is a smarter financial play, then definitely, do not shy away from the opportunity at hand. But if we had to give advice to a potential client about the timing of the market we would tell them Hold on for just a little longer. Here’s why.
1. High Interest Rates
Although residential real estate has always been an emotional decision usually made based on how much a client loves a home and its neighbourhood, Investment properties have always been a completely different beast. Buyers are looking at ROI, Cap rates and long term speculation which make today’s volatile market a very dark and gloomy environment for sellers in Quebec. Most buyers looking for investment properties are searching for a deal right now. Either properties that can be optimized, or where the numbers work at high interest rates (making it a solid long term investment) If you are a seller looking to capitalize off of high demand and low inventory, then this is not the market for you.
2. Growing inventory numbers
If anyone remembers the last 2 years (2020-2022) and anything about them, they remember that the market was VERY low on inventory, whether we were looking for a single family home, condo, triplex or 12 unit apartment building there was just nothing on the market, making even the savviest of investor’s jump into real estate blindly. Today, inventory on the investment property front is growing almost three times as fast as residential inventory is growing. This means that buyers now have a choice when shopping for investment properties, making their decisions much more rational than rushed and finding ways to twist the numbers so it works to their advantage.
3. Other Investments Just Make More Sense
If you’ve been looking for a good return on investment, right now with interest rates as high as 8% on the commercial side of things (6+ Units) Real estate just isn’t looking too good on the short term spectrum. Without any doubt in my mind, if you have a big cash down, and love real estate, it is always the best long term investment. With GIC’s and other short term (12 month) investments hovering around 5-6% ROI, Sometimes it just does not make sense to make a move on a property losing money on a monthly basis. What we are seeing is a majority of buyers gravitating to a safer style investment such as a GIC as mentioned above for 12-18 months until rates drop a little bit, making investment properties more interesting.
In short, if your goal is to sell a property to make a bigger and better move, or you’ve been holding onto your investment property for decades and are making a cool profit regardless, we strongly suggest waiting a little longer before pulling the trigger on an investment property sale! For more information, or to talk real estate, give us a call!
