Canada Multifamily Invester's Blog

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#9 What are Cap Rates?

cap rates Aug 10, 2019

It’s of utmost importance when investing in apartment buildings to understand how to determine the current value of the asset and the principles of the valuation method.

So this short video, I walk you at a high level through the various valuation approaches used by appraisers and banks alike with emphasis on the ‘INCOME CAPITALIZATION APPROACH’ which used for multifamily properties.

YES, I’m going to talk about ‘CAP RATES’ and demystify them once for all! I’m also attaching an article I’ve written on this subject years ago which includes some tips.

First though, let me tell you the following:

DON’T GET HUNG UP ON CAP RATES!

That’s because you don’t get to choose the cap rate! Your banker and/or CMHC and the market decide what the cap is going to be.

If you really want to get hung up on something:

‘GET HUNG UP ON CASH FLOW!’

You must make the apartment building has a net positive cash flow.

LET THE NUMBERS TELL YOU THE STORY! NOT YOUR EMOTIONS!

 


Discover the step-by-step process for investing in apartment buildings used by Canada’s leading Multifamily Investing expert, Pierre-Paul Turgeon.

https://www.multifamilyinvestingcanada.com/cmib-training-enrolment


To you becoming the master of your fate and the captain of your soul!

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"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.” - Theodore Roosevelt, U.S. president