Two buyers look at the same Montreal triplex. The first sees '2 of 3 units vacant' and moves on: no income, too much risk. The second sees the same line and makes an offer the next day. Both reason defensibly — they simply aren't evaluating the same thing.
Vacancy at purchase is neither good nor bad in itself. It is a symptom of something, and the whole question is what. This article gives the method to decide: where the vacancy comes from, what it costs while you carry it, what it actually allows you to do on rent, and when it justifies negotiating — or walking away.
The 5 scenarios behind a vacant unit
Before any calculation, identify the cause. A seller rarely volunteers it, but it shows through in the listing, the leases and the inspection.
| Scenario | What it signals | Risk level |
|---|---|---|
| Deliberately emptied for the sale | The seller is maximizing price: an empty plex also sells to an owner-occupant, not only to an investor | Low |
| July 1 departure, not re-leased | The seller was already selling and chose not to re-lease | Low |
| Not rentable as-is (major renovations) | The restoration cost is not in the asking price | High |
| History of fast turnover on that unit | Recurring problem: noise, humidity, neighbours, layout | High |
| Ongoing dispute or repossession | Unresolved legal situation you inherit | Very high |
The real advantage: you don't inherit an under-market rent
This is the true argument, and it is often stated badly. In Quebec the lease follows the building: article 1937 of the Civil Code provides that alienation of the immovable does not allow the new owner to terminate the lease, and the Administrative Housing Tribunal makes the same point to buyers — a sale does not affect the tenant's right to keep the dwelling on the conditions set out in their lease. Buying a leased plex, you therefore take over the leases on their existing terms. The rent the seller's tenant paid becomes your rent, and bringing it back to market takes months — modification notice, tenant response period, and possibly a rent fixing by the Administrative Housing Tribunal (TAL).
A vacant unit cuts through all of that. You sign the first lease, you set the entry rent, and your return starts at the real market level rather than the level inherited from a lease signed six years ago.
On a Montreal triplex where two units are rented $250 below market, that gap is $6,000 a year of lost income — year after year, with limited catch-up capacity under the legal framework for increases.
What vacancy costs while you carry it
The advantage above has a price, and it runs from possession day. Here is the typical monthly carry of an empty unit in a Montreal plex, for a unit whose market rent would be $1,700.
| Item | Monthly amount | Nature |
|---|---|---|
| Rent not collected | $1,700 | Lost income |
| Unoccupied-unit insurance surcharge | $40 – $90 | Cost caused by the vacancy |
| Frost protection heating and base electricity | $60 – $150 | Cost caused by the vacancy |
| Economic cost of one vacant month | ≈ $1,800 – $1,940 | Total of the lines above |
| Mortgage, taxes and base insurance | ≈ $1,780 | Owed even if the unit is leased — but funded without rent to cover it |
Three months of vacancy on a single unit is therefore roughly $5,400 to $5,800 in economic cost — very often exactly the price gap you negotiated at purchase. That is where many 'good deals' evaporate: the discount obtained is lost again in carrying cost.
The 3 risks vacancy can hide
1. The unit isn't rentable as-is
An empty unit shows better than an occupied one — use that. Check what a tenant will refuse: basement humidity, windows to replace, outdated electrical, sound insulation between floors. A unit emptied to be renovated and never renovated transfers the bill to you.
2. Rental demand isn't what you imagine
The rent projected in the listing is a seller's claim, not market data. On a third-floor 5½ with no parking, the gap between hoped-for rent and actually signed rent can reach $200 a month. Validate against real comparables in the sector before building your financial model on it.
3. Vacancy lasts longer than announced
Leasing takes time even in a tight market: listing, showings, candidate selection, file verification, signing, then the wait until move-in. A unit available in September in Montreal does not lease at the same pace as one available in May. Plan on the real calendar, not the optimistic one.
The 6-question decision grid
- 1Exactly how many months has each unit been vacant? Past 12 months, Annex G no longer constrains you — a concrete, quantifiable advantage.
- 2Why did the last tenant leave? Normal departure, or a signal about the unit itself?
- 3What rent can actually be signed, validated on comparables from the same neighbourhood, floor and layout?
- 4How many carrying months must you finance before the first rent cheque, and do you have that liquidity in reserve?
- 5What does it cost to make the unit rentable at the target rent — not merely habitable?
- 6Are the still-leased units near market rent, or are you inheriting the opposite problem on the others?
How to negotiate when units are vacant
Vacancy is a legitimate negotiating lever, provided you quantify it rather than invoke it. A seller responds poorly to 'there are empty units'; they respond well to 'here is the $5,550 of vacancy over three months and the $9,000 of restoration I am absorbing for you'.
- Document the real economic cost of the vacancy, and separately the charges to fund without rent
- Price the restoration with actual quotes, not back-of-envelope estimates
- Remind the seller they already carry that cost every month the building stays unsold
- Separate what is negotiable (the price) from what is not (Annex G, existing leases)