A report by Canada Mortgage and Housing Corp. suggests a majority of landlord investors who bought properties in large, high-rise condominium buildings in downtown Montreal are not collecting enough rent to recoup their operating expenses.

The national housing agency estimates that investors who made a 20 per cent down payment on their properties are spending more on mortgage payments, condo fees and property and school taxes than the amount they receive in rental income.

The report looked at 375 rented condominiums it examined from Quebec's property listing service, Centris.

“What we find is that 75 per cent had a negative cash flow,” said CMHC economist Francis Cortellino, the report’s author.

It found that in this scenario, operating expenses on average exceeded rent by $385 a month.

CMHC noted the conclusions were theoretical and could vary due to other factors that were not taken into consideration for the report, including whether the owners put down a down payment larger than 20 per cent or if the unit was purchased with cash.

Cortellino said the ultimate hope for these investors is that their costs would be recouped in the resale of the condo if market conditions continue to tighten and favour sellers.

Last month, the Greater Montreal Real Estate Board reported condo sales were up 22 per cent year over year, with the median price for a condo up four per cent to $265,000.

The CMHC study comes at a time when tenants’ rights advocates are worried about rising rents, and a housing crisis.

In one year, the average rent for a studio apartment downtown climbed from $785 to $850, amounting to an extra $800 per year, said Eric Michaud of the Comite Logement Ville-Marie.

Michaud says the problem started during the Tremblay administration when the city abolished restrictions on large towers. That led housing speculators to drive up the price of land, he said.

“It created a housing boom,” said Michaud, explaining, though, that most new constructions aren’t built for families – and there’s now a shortage of three-bedroom rental units.

“The average price for those is $1,500,” per month; he said – too much for many renters.

The concern is if condo owners aren't making enough money, rents will continue to rise.