Hidden Costs in Real Estate Investments

Prevent stress during your first few months of investing in real estate. Here are some hidden costs that you should know about when investing in real estate:

1. Land Transfer, Property and School Taxes

The land transfer tax, also known as Welcome Tax, is the tax of transferal of ownership from one owner to another. In Montreal, land transfer prices are broken into rates per price bracket. For a property sold at $500,000, you should expect to pay $6,000 for the land transfer tax.

Property taxes are calculated as a percent of the municipal evaluation of the property, and range according to the type of building, and the district.

School taxes are uniformly priced. The 2017–2018 school tax rate is $0.17832 per $100 of assessment. For a property evaluated at $500,000, you should expect to pay $892 annually for the school tax.

2. Inspection

Having your home inspected is an essential step for all buyers. An inspector will also give you a quote of how much it would cost to carry out repairs for hidden and obvious defects. Using the inspectors report, buyers can effectively negotiate for discounts in order to account for the required improvements that the inspector recommends.

The price for a property inspection varies according to 3 variables: the surface area being inspected, the age of the property, and the reputation of the inspector. Typically, this price should range between $800 and $2,500 for your inspection.

3. Mortgage Insurance

Mortgage loan insurance is typically required by lenders when buyers make a down payment of less than 20% of the purchase price. To obtain mortgage loan insurance, lenders pay an insurance premium. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

For a property valued at $250,000 and on a 25 year mortgage at 10% down, you should expect to pay around $9,000 towards your mortgage insurance which can be financed in your monthly mortgage payments.

4. Notary

A required but unpleasant experience for buying a property is sorting out the papers with a notary, which also comes with a notary fee. In some cases, the mortgage lender pays for a portion of the notary fee but usually it is up to the buyer to select and compensate the lawyer who notarizes the final act of sale.

Expect to pay between $750 and $1,500 for a notary.

5. Title Insurance

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.

For a $500,000 property, your title insurance would cost approximately around $500.


With worthitlabs.com, these hidden costs have been estimated for you market studies performed by Real estate experts. Using this platform, you are able to integrate these costs with an evaluation of your property without worrying about the market analysis and its financial projections as it has been performed for you. The Worth It Labs analysis takes into account your style as an investor as well as your perception of the property to give you personalized metrics that tell you if a certain investment property is viable.