The idea to own one’s own revenue-creating building is amongst the most popular projects of Québécois and Québécoises alike.
Many have tried to realize their project but, because of lack of information about this kind of transaction, they saw their dream being transformed into a nightmare.
There is a minimum of precaution to take in order to make a success of such a project.
Firstly, it is necessary to have the means and the possibility of keeping certain savings after the purchase to avoid unforeseen occurrences. Do not rely only on the revenue created by incomes of the building to support the expenses engendered by it, because that could lead you to catastrophe.
Then, before buying, take time to visit the building, to meet all of the tenants and ask to see the leases. Read them attentively. Be wary of the tenants who do not want to meet you or of the owner who does not want to introduce them to you. Obtain the assurance of the salesman that the leases that one submits to you were not modified by other agreements, whether they be verbal or “by tolerance”. These are essential stages in order to enable you to determine well the obligations that you will have to assume following the purchase. Indeed, you must respect the leases and all of the written and verbal agreements concluded with the tenants. Your arrival will not put an end to these agreements. Clarify all uncertainties with the owner.
Also, take the pulse of the district; inform yourself on everyday life in this building.
Have a meticulous inspection of the building done by an expert. To save on this is, in the majority of the cases, a very bad idea. Ideally, take a reference coming from somebody who is not a party interested in the sale. A characterization study of the site (testing of the soil) is often preferable to ensure you that it is not contaminated. The price, the quality and the need for these inspections are not only justified but essential.
Never be too optimistic vis-à-vis a building at an enticing price. There is always a reason to register a house at a low price. Ask even more questions on this subject.
For a new building, take time to fill out section “F” in the lease. This section enables you to adjust the rent at market price during the first five (5) years. The rate of increase in the rent of the Régie du logement will not apply for this period.
Remember that buying a building can compare itself with the purchase of a company: the figures are important.
Take an agent of the building to put forward your offer of purchase and request to have access to a notary to write the sales contract.
Lastly, the rules which govern the relationship between lessor and tenants are quite extra- ordinary. It can be interesting to familiarize yourself with some of them before making your purchase. For example, did you know that, even if you are owner of the building, you must make a request to take one of the apartments for yourself to reside there, that the Régie du logement could refuse you this request in certain cases and often grant an indemnity allowance to the tenant?
If you respect these stages, you will at least decrease the risk of nasty surprises and you will buy a product which you will really know. If not, surprises are assured.