This week on Les Oranges Pressées on CIBL, we will be discussing investments in semi-commercial properties and whether they are worth the effort. Every real estate agent will tell you: there’s a big difference between buying a condo or duplex, and acquiring a property that is half commercial. Although Montreal has interesting commercial strips, it’s always a good idea to do some research before diving in.

Property Access

Becoming a commercial property owner is not as easy as owning a fully residential property. In the first case, you must dispose of funds equivalent to approximately 35% of the sale price of the property in question. Luckily the CMHC (Canada Mortgage and Housing Corporation)—whose mission is to assist Canadians seeking housing—can be of use to you if you decide to open your business at the ground level and live upstairs! In this case, the CMHC can provide you with insurance and fifteen down payments.

A Long-Term Investment

Leases for semi-commercial properties are of longer duration than residential buildings and are therefore excellent long-term investments. However, you must pay special attention to the quality of the commercial premises. In fact, some commercial strips found in Verdun, the Plateau Mont-Royal, or Hochelaga-Maisonneuve are characterized by neglected commercial buildings. Back in the day, shopkeepers did not necessarily live above their shops, which resulted in unkempt properties. But this trend has recently taken a turn, and shopkeepers are now increasingly living above their businesses.

Two Opportunities

When purchasing a semi-commercial property, two possibilities are available to you: you can either build your commerce on the ground floor and live above it, or you can live above and rent the commercial space to another business. In the second case, pay special attention to the price! Make sure to offer a reasonable rent to allow a business to settle in. Determine whether a shopkeeper would be compelled to move into your building. If this is not the case, the investment becomes much less interesting for you too! Also, take into consideration the period between tenant occupancies, since a vacant space means additional fees and expenses for the property owner.

The acquisition of a semi-commercial property is a profitable and guaranteed investment if you plan to live there and establish a commercial business. Moreover, it protects you from rent increases! On the other hand, choosing to rent the space to another business can be tricky, since in this case, you will have to depend on finding tenants who will agree to your set prices.

In both cases, it’s important to conduct a market study to identify the trends of the commercial strip you will invest in. Bankers are a great resource on the subject, so feel free to consult with them when applying for your loan.

Do you have any real estate questions ?  Call or email us with your questions, and we will make sure to answer all your questions.

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