Plex or Condo in Montreal: Two Commitments, Not a Ranking

Photo: Dllu, Wikimedia Commons, CC BY-SA 4.0

A plex is a business. A condo is a home whose building management is delegated. Comparing them means comparing two commitments, not two rankable investments. Here are the rules that govern each.

The down payment depends on the unit count and on whether you live there

For a CMHC-insured loan, the home must be intended for homeowner occupancy, by the borrower or by a related person in the cases provided for. The minimum equity is then 5% of the first $500,000 of lending value and 10% of the remainder for a 1 or 2 unit property, but 10% as soon as the building has 3 or 4 units. Property value must stay below $1,500,000, and gross and total debt service ratios are capped at 39% and 44%.

If you will not live in the building, the logic changes. CMHC Income Property covers 2 to 4 unit rental properties that are non-owner occupied, with a maximum loan-to-value of 80%, so a minimum equity requirement of 20%, and a property value below $1,000,000.

The same building therefore does not require the same down payment depending on whether you live in it. That is the first line of the budget, before any yield calculation.

What the lender does with the rent

CMHC also frames how rent enters your file. For an owner-occupied property that is the subject of the loan application, the gross rental income approach may go up to 100% in a 2 unit building, but only up to 50% of gross rental income, or the net rental income approach, in a 3 or 4 unit building. For a non-owner occupied property that is the subject of the application, it is up to 50% of gross rents or the net rental income approach, meaning gross rents less operating expenses. Under the gross approach, the percentage of rents is added to gross annual income.

A condo brings no rent into the calculation, but it adds a charge: 50% of the condominium fees go into both ratios. Two buyers with identical employment income therefore do not have the same borrowing capacity. Test it from pre-approval onward.

Rents are not set freely

This is what yield spreadsheets forget most often. A residential lease is renewed by operation of law (article 1941 of the Civil Code). To change it, the landlord must send a notice at least three months and not more than six months before the term of a lease of 12 months or more, or one to two months if the lease is shorter (article 1942), stating in dollars the new rent or the increase (article 1943). The tenant has one month to refuse (article 1945). If he refuses, the landlord has one month to apply to the Tribunal administratif du logement, failing which the lease is renewed on the previous conditions (article 1947).

The tribunal does not decide by feel. The Regulation respecting the criteria for the fixing of rent sets the components: a base percentage applicable to the rent, the variation in municipal property and service taxes, the variation in school taxes, the variation in fire and liability insurance premiums, a 5% percentage applicable to capital expenditures made during the reference period, and expenses arising from a new service. Each criterion is applied according to the share attributable to the dwelling. The base percentage comes from an average of three annual variations in Quebec’s consumer price index, and the TAL set it at 3.1% for notices of modification given on or after 1 January 2026.

Two rules complete the picture at purchase. Article 1896 requires the landlord to give a new tenant, at signature, a notice stating the lowest rent paid in the preceding 12 months; a false declaration or a knowing omission opens the door to punitive damages. And article 1950 lets that new tenant have the rent fixed within 10 days of the lease, or within two months if he never received that notice.

A building with below-market rents therefore does not reset when the deed of sale is signed. Article 1937 is explicit: the voluntary or forced alienation of an immovable comprising a dwelling does not allow the new lessor to resiliate the lease, which is continued, and the new lessor has the rights and obligations resulting from it toward the tenant. Only a newly built immovable escapes the rent-fixing remedy, for five years, and only if the lease says so and states the maximum rent (article 1955).

The real work of a landlord

Since 2024, a landlord notified of an assignment of lease may refuse to consent for a reason other than a serious one, but the lease is then resiliated on the assignment date stated in the tenant’s notice, and the assigning tenant may not require any consideration (articles 1978.1 to 1978.3). Where rent is late, resiliation becomes available beyond three weeks (article 1971).

Repossessing a dwelling to live in it yourself or to house a close relative requires a notice at least six months before the term of the lease (article 1960) and, if refused, an application to the tribunal within the month, where you must show your genuine intent (article 1963). Article 1959.1 prohibits it where the tenant or his spouse is 65 or older, has occupied the dwelling for at least 10 years and has income at or below 125% of the maximum for low-rental housing eligibility, subject to the exceptions provided. And eviction to subdivide, substantially enlarge or change the use of a dwelling requires payment of moving expenses plus an indemnity of one month’s rent per year of uninterrupted occupancy, with a minimum of three months and a maximum of 24 (article 1965).

These are deadlines, notices, proof and sometimes hearings. On paper, rental management looks like a job. My own experience is more nuanced. I bought my triplex less than two years after finishing my doctorate, before becoming a broker. I live on the ground floor and rent out the other two units. A building in good condition, bought well, takes less of my time than a part-time job. Both conditions matter: a poorly maintained or overpriced building reverses that, and every article cited above still applies to each lease.

Rental taxation is not a footnote

Revenu Québec requires rental income and expenses to be reported on form TP-128. Capital expenses are not deductible in the year they are incurred: they are spread through capital cost allowance. That deduction is optional and is limited to the rental income left after all other expenses, so it cannot create or increase a loss. Land is not depreciable, the class 1 rate is 4%, and you are entitled to it only for the rented portion: nothing on the unit you live in.

The reverse arrives on resale. If you dispose of the property above its purchase cost, you add the recapture of capital cost allowance to that year’s rental income, on top of the capital gain. And if you rent out the whole residence you used to live in, the change of use triggers a deemed disposition at fair market value.

What a condo asks instead

No tenant, no TAL, no rental bookkeeping. In exchange, expenses you do not set: the board fixes them each year after consulting the general meeting (article 1072). What you can demand before signing is set out in the guide to condo fees, and what you are really delegating in condo or house.

The decision framework

Neither is a better investment than the other. They simply do not ask for the same things, and they do not repay the mortgage the same way.

In my triplex, the welcome tax, the notary fees and the inspection did not surprise me: I had put them in the calculation before the offer, along with the rents, the expenses, the maintenance history and the work ahead. What surprised me was how fast the equity built up. The two rents help me cover the mortgage, the taxes and the building’s expenses: most of the principal repaid each month is paid by the tenants. On top of that comes the rise in the building’s value. A few years after the purchase, that equity allows me to refinance and buy another property with a large down payment. In a condo you live in, the principal repaid comes entirely out of your own budget. This is my case, not a promise: it depends on the price paid, the rents in place and the market in those years, and it is not financial advice.

• Do you want an asset or an occupation? A plex gives you landlord obligations, framed by the Civil Code and the TAL, all year long.
• Does your down payment match the structure you are aiming at? Five, ten or twenty per cent: the difference comes from the unit count and your occupancy.
• Can you live with the current rents? Those are the ones you are buying.
• Have you read the leases and the rent roll? That is the first step of an income property purchase.

Torn between a plex and a condo on the same budget? Write to me: we put the rents and leases on one side, the fees and the declaration of co-ownership on the other. Already own a plex and thinking of refinancing to buy another? I can direct you to mortgage brokers, then guide you through the purchase.

Georges Matar

Residential Real Estate Broker · RE/MAX DU CARTIER INC.

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