In­vest­ing in multi-fam­ily prop­er­ties

Tony Miller

Ottawa Sun - New Homes - - HOMES -


TM: “How are mul­ti­fam­ily prop­er­ties as­sessed in or­der to de­ter­mine their val­ues?”

“The in­come cap­i­tal­iza­tion ap­proach is the main method used by ap­prais­ers, bankers and CMHC to de­ter­mine the value of multi-fam­ily prop­er­ties. The CAP rate is the met­ric used by real es­tate in­vestors to com­pare dif­fer­ent prop­er­ties based solely on op­er­at­ing per­for­mance or Net Op­er­at­ing In­come (NOI). Know­ing the CAP rate of a par­tic­u­lar build­ing can help an in­vestor make bet­ter de­ci­sions but it should only be one of the “tools” used to es­tab­lish the ap­prox­i­mate value of a prop­erty. The CAP rate can be used to find out if the ask­ing price of a prop­erty is within the norm for the mar­ket place. If it is out­side the norm, it means you may be pay­ing too much or you may be get­ting a deal. CAP rates should be used when eval­u­at­ing unique prop­er­ties or in­dus­trial, com­mer­cial, and multi-fam­ily prop­er­ties. CAP rates shouldn’t be used for sin­gle fam­ily homes or even du­plexes – in­vestors should use sold com­pa­ra­bles to de­ter­mine the value of th­ese prop­er­ties.”

If you would like to learn how to in­vest in multi-fam­ily build­ings, Mat­ter­horn Prop­er­ties of­fers both on­line and live work­shops. The next live work­shops are sched­uled this year on 14-16 Septem­ber in Edmonton and 28-30 Septem­ber in Hamil­ton. Please visit the fol­low­ing web­site for de­tails: www.multi-fam­i­ly­in­vest­ing­

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