Investment in Land

An investing in land is a safe investment. As more and more people from Montreal are looking to get houses in the country. New developments are mushrooming to meet this demand. Much land is still available in the Laurentians, even a variety of lakefront properties, but prices are rising and all of the best spots are quickly being bought up. Given past trends, it seems inevitable that land prices will continue to increase. Real estate values have risen by 40%-45% in the Laurentians in the last three years.

Here is an example of a property investment at Domaine Le Sanctuaire des Lacs. In this example, the buyer does not build on the land for the time being, and could resell the property in five years for a theoretical profit of $40,000.

Sample Five-Year Investment Profit Statement

Note 1: Interest is on mortgage loan, based on a $75,000 loan ($71,737 down payment) see chart for other interest rates.
Note 2: Association fees are tax deductible on personal return. Fees are based on a projected annual average. This estimate is based on the actual budget of approximately $60,000 divided amongst the thirty-five actual owners. As long as land is being sold we estimate that in 5 years there should be at least 50 to 65 owners.
Note 3: Commission to real estate agent not in Cash flow needed as will receive sale funds before paying commissions.
Note 4: 10% Appreciation (although present rate of appraisal is 15-20% see chart of appreciation rates.
Note 5: 48,779/109,806
Note 6: Only half of the profit will be taxed as it is considered a capital gain.

Other considerations:
1) Only half of profit will be taxed as is considered a capital gain.
2) Land in the meantime may be used for personal reasons (beach, fishing, canoeing)
3) see association ruling.

Building
Building a house on your property has further advantages. For example, the land mentioned above but with the addition of a house costing $150.000 to build has a potential higher immediate resale value. Even though your total costs are $300,000, this property could sell for up to $375.000 right away (depending on market conditions). See more details on building a home.

Rentals
You will soon be able to consult our directory to see which properties are available to rent. The house in the example above can be rented out for about $2000 /month on an annual basis or seasonally for $3000 per month for the summer months. See our rentals page for more details on renting out your home.

Appreciation rates