Rental condos are attracting more and more Quebec investors in 2026. With a tight rental market — vacancy rate of 2.1% in Montreal — and consistent real estate appreciation, a condo represents an accessible entry point into real estate investing. But is it really profitable? What are the actual numbers behind a condo rental investment? This guide presents the latest CMHC and QPAREB data, a detailed cashflow calculation, and a comparison with plex investments.
1. Average gross yield for a rental condo in Montreal
According to CMHC (October 2025 report), the average gross rental yield for a condo in Montreal stands at 4.1%. This figure is calculated by dividing the annual gross rent by the condo purchase price. For example, for a $350,000 condo rented at $1,650/month, the calculation is: ($1,650 × 12) / $350,000 = 5.66% gross yield. This figure is above the average because the purchase price is below the market median.
Gross yield varies significantly by neighbourhood. In the Plateau Mont-Royal, where condos sell for more, the yield drops to about 3.5%. Conversely, in areas like Montreal-Nord or Saint-Leonard, gross yield can reach 5% or higher. The challenge is finding the balance between a good yield and long-term capital appreciation.
It is important to distinguish gross yield from net yield. Gross yield does not account for actual expenses: condo fees, taxes, insurance, vacancy, and maintenance. The actual net yield typically falls between 2% and 3% for a condo in Montreal, which is significantly lower than yields offered by plex investments.
2. Detailed cashflow calculation — $350,000 condo
Here is the typical scenario for an investor buying a $350,000 condo in Montreal as a pure rental property (non-owner-occupied). A 20% down payment is mandatory for a rental property.
Purchase parameters
| Item | Amount |
|---|---|
| Condo price | $350,000 |
| Down payment (20%) | $70,000 |
| Mortgage ($280,000 at 4.29%, 25 years) | $1,527/mo |
Monthly income and expenses
| Item | Amount / month |
|---|---|
| Revenue: rent | $1,650 |
| Mortgage | $1,527 |
| Condo fees | $350 |
| Municipal / school taxes | $230 |
| Landlord insurance | $75 |
| Vacancy provision (5%) | $83 |
| Total monthly expenses | $2,265 |
| Monthly cashflow | -$615 |
The cashflow is negative at -$615/month, or approximately -$7,380 per year. This means the investor must inject money out of pocket each month to cover expenses. This is the reality for most rental condos in Montreal in 2026. However, it is not necessarily a bad investment when you consider the total return on equity.
3. Return on equity vs cashflow
Cashflow does not tell the whole story. The investor benefits from three sources of return: mortgage principal repayment (approximately $600/month in the first year, increasing progressively), market appreciation (historically 3–5% per year in Montreal), and tax advantages.
On a $350,000 condo with 4% annual appreciation, the value increases by approximately $14,000/year. Combined with principal repayment of approximately $7,200/year, the investor accumulates about $21,200 in equity per year, despite a cashflow loss of $7,380. The net return on the $70,000 down payment therefore reaches approximately 19.7% when including appreciation and principal repayment.
This is the real estate leverage effect: with $70,000 in down payment, you control a $350,000 asset and benefit from appreciation on the entire value. This advantage is unique to real estate compared to traditional investments. However, you must have the liquidity to absorb the negative monthly cashflow and unforeseen expenses (major repairs, special assessments from the condo association).
4. Tax advantages and deductions
One of the major advantages of rental investment is the ability to deduct numerous expenses from your rental income. Here are the main deductions available in Quebec:
- Mortgage interest: only the interest portion is deductible, not the principal. In the first year, on a $1,527 payment, approximately $927 is interest.
- Condo fees: the $350/month condo fees are fully deductible.
- Municipal and school taxes: $230/month deductible.
- Landlord insurance: $75/month deductible.
- Repairs and maintenance: all current maintenance expenses are deductible in the year they are incurred.
- Advertising and travel: expenses for finding a tenant are deductible.
- Capital cost allowance (CCA): the depreciation allowance on the building (4% on the structure) can reduce your taxes but will be recaptured at sale.
By adding up deductions (interest + fees + taxes + insurance), an investor can deduct approximately $19,000 per year from their rental income of $19,800 ($1,650 × 12), significantly reducing the tax payable on rental income. If rental losses remain, they can be applied against other rental income.
5. Rental condo vs plex: comparison
Many investors hesitate between a rental condo and a plex. Here is a detailed comparison of both options:
| Criteria | Rental condo | Plex (duplex/triplex) |
|---|---|---|
| Entry price | $250,000 – $450,000 | $600,000 – $1,200,000 |
| Down payment (20%) | $50,000 – $90,000 | $120,000 – $240,000 |
| Monthly cashflow | Negative (-$400 to -$800) | Positive or neutral |
| Gross yield | 3.5 – 5.5% | 5 – 7% |
| Management | Easy (condo board) | More demanding |
| Appreciation | High | Moderate |
| Liquidity (resale) | Very good | Good |
A rental condo is better suited for beginner investors with a limited budget who want a “turnkey” investment with minimal management. A plex is ideal for those who want to maximize cashflow and are willing to manage multiple tenants. For a complete analysis, check out our guide:
Frequently asked questions — Rental condo Quebec 2026
What is the average rental yield for a condo in Montreal?
The average gross rental yield for a condo in Montreal is approximately 4.1% in 2025–2026 according to CMHC. The net yield, after deducting expenses (condo fees, taxes, insurance, vacancy), typically falls between 2% and 3%.
Is a rental condo profitable in 2026?
A $350,000 rental condo with $1,650/month rent generates a negative cashflow of approximately -$615/month after all expenses. Profitability relies more on capital appreciation and mortgage paydown than on immediate cashflow.
What expenses can you deduct on a rental condo?
Deductible expenses include: mortgage interest (not principal), condo fees, municipal and school taxes, insurance, repairs, advertising, management fees, and capital cost allowance (CCA) on the building.
Condo vs plex: which is the better rental investment?
A plex generally offers better cashflow thanks to multiple rental incomes. A rental condo is more accessible (lower down payment), requires less management, and often provides better appreciation. The choice depends on your budget and management tolerance.
What is the minimum down payment for a rental condo?
For a non-owner-occupied rental property, the minimum down payment is 20% in Canada. For a $350,000 condo, that represents $70,000. If you live in the unit, the minimum down payment is 5% (with CMHC insurance).
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