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Landlord Math – Cap Rate and Return on Investment





This is an article from our regular real estate columnist Rachelle.

Every landlord should know some basic math. There are calculations that are indispensable to the business. I have seen plenty of fast and loose interpretations of these formulas. Remember when you are buying a property the seller is going to try to get creative to minimize expenses while you the buyer must use proper formulas to determine the purchase price for the property.

Capitalization Rate (Cap Rate)

This is probably the most common metric used by investors. Sellers will drastically understate expenses. Ask for copies of original bills. If they refuse just move on and find a more honest seller.

  • Gross Operating Income – Expenses = Net Operating Income (NOI)
  • Net Operating Income/Purchase Price = Cap rate

Lets talk about expenses. This includes bills such as natural gas, electricity, water and property taxes. This calculation also includes a percentage for maintenance, property management and vacancy allowance. Those expenses are what sellers leave out. This is your safety margin and believe me you will need it at some point.

Sample Cap Rate

A nice example of a Cap Rate calculation can be found here on CMHC’s website.

The only item they are being shy about is the percentage for property management. You should calculate your property management at around 7% in my opinion. All things considered, the calculation is well done. You can find vacancy rates for different areas here.

Deferred Maintenance & Micro Analysis

When deciding what to offer for a property you’ll want to look at deferred maintenance both in the apartments and throughout the building. This is the list of stuff the previous owner should have done but did not.

You’ll also want to know more about the building. Was it a drug den? How do people like living there? Were there three murders in the building two months ago? What is turnover like? Have the tenants been there a long time? How is the street? What is the reputation of the building? For this you’ll have to go back to the area without your real estate agent and knock on some doors.

Cap Rate Reversed

You’ll want to calculate the Cap Rate equation in reverse. This way you can decide how much you want to pay for the building.

  • NOI/Cap Rate = Purchase Price

Lets assume you want to achieve a Cap Rate of 8%. You’ll want to plug in all your numbers for expenses to figure out the real Net Operating Income then do the calculation to figure out how much your final purchase price should be.

  • $40,000 (NOI) / .08 = $500,000 (Purchase Price)

Cash on Cash Return

This calculation is more complex. Once you have figured out your NOI you calculate this important metric. This measures what the Return on Investment (ROI) will be on the cash used. This is how to operate this calculation.

  • NOI – Mortgage payment = Projected annual cash return
  • Down Payment + Closing costs + Deferred Maintenance Expense = Cash Outlay
  • Projected Annual Cash Return/Cash Outlay = ROI
  • Cash Outlay/Projected Annual Cash Return = How long it will take before you get your money back

Buying income property is NOT a POPULARITY CONTEST.

The only reason to buy an income property is to make money. The only way you’ll make money is to buy properly. With income property, it’s all about the cash flow. If you a buy a property without all the safety margin numbers in place, you will end up putting more of your hard earned cash into the property. Month after month, year after year you can look forward to owning a cash-sucking cow of a property.

You should put in offers on property using your analysis. Without offers no one will ever say yes. To do this you’ll need a real estate agent. Lots of real estate agents will not want to put in the offers you want. If you’re serious you might want to respect your real estate agents time by paying him or her something every time you put in an offer. You may have to put in 20 offers before one gets accepted. Why should the real estate agent spend his time and money working with an investor and putting in a bunch of complicated offers when they can go find a nice first time buyer, show them a couple houses and get a sale.

Feel free to show your math to the seller. It’s very likely you aren’t informing them of anything. They want to get as much as possible for their property. Can you blame them? It’s not at all like buying a residential house. These properties are not very liquid and the only thing that matters is the income.

Return on Investment for Improvements

Once you have your property if you’re smart you’ll want to figure out how to increase the income. Every time you increase the income by $50 you’ll increase the value of your building and improve tenant quality.

How much is a $50 per month increase in rent worth to the investor?

  • $50 x 12 months = $600
  • $600/.08 (Cap Rate)= $7,500 increased value of building

You’ll want to figure out the payback on the improvement. How long will it take to get that money back? Increased building value is great but you don’t get that money unless you refinance or sell the building.

If the improvement is painting the kitchen, putting new handles on it and installing a counter top. This will cost you $800 (assumed).

  • $800/$50 = 16 month payback
  • $50/$800= 6% ROI
  • $7,500 increased value of the building.

Lets try to put the $800 towards a brand new kitchen. The kitchen is 15 years old and beat up. Let’s try and get an extra $100 per month rent. We’ll spend $2000 on our kitchen. (assumed)

  • $2000/$100 = 20 month payback
  • $100/2000 = 5% ROI
  • $15,000 increased value of the building.

The new kitchen is a better investment. At the end of the payback period you have replaced something old with something new that you get to keep. Your building value has increased by $15,000.

Cap Rate Spreadsheet

Editors Note:  Due to high demand, I have included Rachelle’s cap rate spreadsheet here.

How to use the Spreadsheet

This is a sample building, a real one, which is not a great investment IMHO.

1 – You will have to figure out your own vacancy rates (which you can find on the CMHC website) it varies with each neighbourhood. Each property will be different and you will have to check up on every one.

2 – You will have to figure out your own property management fee schedule. For smaller buildings it may cost up to 10% while large multiple unit buildings go as low as 3% of gross income

3 – For Maintenance allowance I allow 10% of the gross monthly rent. This should allow for you to turn over suites when they become vacant and save money for improvements and repairs such as roofs.

Deferred maintenance is any maintenance that has not been done previous to your owning the building that needs to be done. This includes ensuite maintenance that is above wear and tear you will have to pay for. For instance, an existing tenant is living in a suite that has a hole in the countertop near the tap. It should have been replaced but has not. When you become the new owner you assume the liability for the repair.

Download the CAP rate/ROI spreadsheet

Final Thoughts

I urge every landlord/investor to use these calculations. Owning an income property is not the golden path to riches proclaimed in endless programs, courses and seminars. Like any other business you must make wise investments with solid measurable results. It is easy to spend money you don’t need to on things that don’t need to be done or that don’t return any money. Don’t pay foolish prices for income properties. Money must be respected. The numbers are your friends.

Happy Investing !

About the Author: Rachelle specializes in renting property on behalf of landlords and is the blogger behind Landlord Rescue. She also works with investors to find good investments in Toronto and surrounding areas. Her passion is bringing multi res properties back from the brink and maximizing profitability. Check out some of her other real estate posts on MDJ.





44 Comments, Comment or Ping

  1. Thanks again for another good real estate post. I really like reading them.
    Cheers.

  2. We have to remember that everyone’s looking out for their own best interest so if cutting corners were possible, sellers might just do it. It’s so important that as a landlord we look over our documents and make sure the math is all correct. Thanks for these basic formulas.

  3. 3. This is why I opened an ING account

    You should know why it is so critical to verify EXISTING income and expense BEFORE establishing value. This also explains why no two investors come up with the same value for the same property.

  4. 4. Rachelle

    @ ING

    That’s the focus of this post. Every Investor given the proper information should get exactly the same valuation.

    It’s not rocket science and if you’re going around basing your investment decisions on real estate agent calculations good luck to you. I just fired off a bunch of emails to get the numbers on some properties listed on the MLS and I can’t even get a freeking rent roll.

    These are industry accepted valuation methods and your bank also uses them to figure out how much mortgage you can get. CMHC also obviously uses these calculations.

    Do you pick stocks using the I like the name approach or do you look at the financials?

    This is essential knowledge for Investors.

  5. 5. Concerned Reader

    “If you’re serious you might want to respect your real estate agents time by paying him or her something every time you put in an offer. You may have to put in 20 offers before one gets accepted.”

    Come on, are you serious? Is this a joke? I have bought 4 buildings so far, and have worked with 3 real estate agents. 1 was slow and after 3 offers (2 of which screwed up on presentation or “misunderstood” the seller) wanted to only put in offers at asking price. The other 2 were very shady and wanted to fake documentation.

    If you buy a $500,000 building, and your agent gets 2.5% (and the other agent gets 2.5%), thats $12,500 dollars. Each offer takes ~3 of prep/presentation on the agent’s part, and 3 hours at closing. Yes, 3 hours, or less (the agents don’t previsit the site, they don’t do any math for you, and they only visit a rental properly after the offer is accepted.) Even if you make 20 offers (including 1 closing), that is $625 for each offer!!! Thats ~210 an hour! I don’t care if they have clients that don’t end up buying, thats their problem.

    I am shocked by how sloppy your real estate articles are. I am also shocked that you are “published” on this site. One article you wrote was nothing but a rant about your friend not being able to renew his mortgage even though you admitted he had serve financial issues.

    You POV is that of a real estate agent, in that, you promote ridiculous practices in the real estate industry, at the cost of the investors themselves. Which will then cost tenants unnecessary costs. Considering that I AM a investor, with 15 units of apartments (all with min 3 bedrooms, in middle class areas) I feel that you are part of the problem.

    You discredit yourself with silly comments like the one above. The rest of the article was mostly valid only because you were stating straight forward, no nonsense math (Which has been published, online or in print, hundreds of times before). So take out the the standard math fluff, and your left with only your “view”. It’s your “view” that shocks me. The one comment alone is an indication to other “views”

    Of course, just tell me you’re kidding! Please!

  6. 6. Greg

    Great post, however I cannot fully agree with the need for a Realtor, or the need to pay them “well”. I for one am glad about the anti-competitive investigations taking place into the real estate industry. You already have the seller’s agent working in your favor, as their payment structure is build to talk the seller into selling.
    I do agree that it’s 100% a number’s game. Take all emotion out of it, and if the numbers don’t work, then the deal is not worth pursuing. Do NOT assume that you will make your money back as the property appreciates. It may just as easily collapse in value.

  7. 7. Rachelle

    Greg

    I totally agree with you but with 80% of properties being sold on MLS and their website getting worse every single day they have arranged it so that you have to ask them for every single detail on a property. Quite frankly it’s aggravating and unless you buy something within their time frame they just stop even talking to you. A couple months ago I had two giving me information now neither one will return my calls.

    I look forward to the day the MLS is cracked open like an egg and people can get their own comparables and proper property information. I just can’t get over the difference I have seen since they changed their website to Realtor.ca

    In the meantime the only way I can figure out to keep them even working is to give them some dough to keep them putting in your offers. Other than that I’m not sure what to do about it. No agent I know of is going to be happy putting in multiple offers and not getting paid.

    Other than that it’s a ton of footwork to find a private deal. That’s probably the best way to be honest but tons of time. Time most investors might not have.

  8. 8. AwesomePeople

    I am curious what a good NOI is? I am 24 and last year bought my first house. The house is devided into 2 parts, and I rent out the basement and share the upstairs with 2 roommates. Basement rents for $1100 a month, and roomates pays $540 each.

    After mortgage and all utilities have been calculated Im “making” ~$250.

    Where should I really be at? Am I being too modest and not pushing for higher rents? I am not even too sure where to invest my income into for the house. What to upgrade etc.

  9. 9. AwesomePeople

    To add to my previous post, the cost of the house was $330,000, with a calculated NOI of $2,958.83.

    I must also add that I am currently living with the 2 roommates (so I do not pay into the house) so technically the top half of the house is mine alone with roommates shared.

    With your formula, I compute a Cap Rate of .9% (roughly).

    Was this a bad investment? if they say 5% = 20 years then this investment would be 111years to pay off :s

  10. 10. Rachelle

    @ Awesome People

    If you are to do this calculation you can’t count your own occupancy in your cap rate. Make a reasonable assumption of what the market rent would be for your section of the house and plug that in there and you’ll have a better idea of how it works. it should make you happier :)

    @ Concerned Reader

    If you use the proper cap rate formula as described in this article which many readers may or may not know and you reverse the formula to decide what is an acceptable purchase price is for a property you will be putting in tons of offers simply because in the city of Toronto the prices on income properties are totally out of control. The smaller the property the worse the problem is.

    Believe me or not I can assure you that many investors are having this same problem as I am, finding proper information, proper cap rates, proper expenses.

    I think that this response deserves a post over at Canadian Money Forum. I will use the information I received on properties currently listed to illustrate what I am talking about.

    The idea that I am some kind of real estate agent lover is absolutely absurd. I hope and pray for the day 80% of all properties get sold FSBO. I think real estates agents are a rip off. What is your solution for the problem that investors who are committed to sane investing are facing?

  11. Rachelle, a bit off topic, but when anticipating costs, what percentage of monthly rent would you allocate for maintenance and vacancy?

  12. 12. Rachelle

    Well a good place to get your info on vacancy rates would be CMHC.

    https://www03.cmhc-schl.gc.ca/catalog/productList.cfm?csid=1&cat=59&lang=en&fr=1277420217840

    You’ll also want to check around the immediate area. Are there a ton of for rent signs?

    Vacancy rates are very important because it gives you a good idea of how high your turnover is going to be. Every time a tenant leaves you have to deal with making the apartment rent ready again and usually eating a month’s rent or even two depending on how fast you can rent the apartment again. Obviously apartments like bachelors usually get more turnover than three bedroom townhouses.

    How much you put aside for maintenance depends on your comfort level and the type of building. Single family dwellings cost more to maintain. I think a minimum of 10% would be prudent. Figure most condo buildings have had to keep 10% of the maintenance fees from the time they were built and this level was insufficient and the rules have now been changed to 15% of the maintenance fees. Buildings are usually cheaper to maintain than houses or townhouses.

    You’ll need this money for roofs, furnaces and a whole bunch of other stuff that will break down over time.

  13. 13. yieldhunter

    Weighhouseblog.com has a good article on valuing your home using cap rates – they’re exceptionally low by most standards

  14. 14. Genius Boy

    Rachelle:

    Thank you for this post. It clearly explains how to look at numbers, cleanly and clearly, and I appreciate that.

    I think the post is clear, and I can understand the value of having a personal relationship with a good real estate agent. Real estate agents rarely get 100% of their fees. Very few of them sell many properties, so I’m not adverse to ensure a strong good relationship (however that entails is up to the individual).

    A good real estate agent who provides me good, concise information has value. I value that friendship. But I’ve also ruined good personal friendships, because they were real estate agents as well, and I tried to use them, and they lost patience while I’ll went and made lots of offer as cut-throat prices.

    BTW I totally disagree with Concerned Reader’s assessment. I find useful insights and confirmation of some of my beliefs from what you say. Thank you.

  15. 15. jesse

    Rachelle, I think an important point is, when determining cap rate, think about ALL costs. I don’t think I’ve ever come across a homeowner or landlord who has fully accounted for their time and money maintaining a property. Often it’s difficult to do because the little things tend to be ignored, including dealing with PM firms if you use one. Also, as was mentioned, sales costs should somehow be factored into the calculation because it reduces the eventual return (unless you never sell but that rarely happens). The other things that affect cap rate is expected tenant quality as well as depreciation, which means more maintenance as the building ages and the commensurate rent that can be charged would tend to lag “market rates.”

    Out of curiosity, what would you consider an adequate cap rate for, say, a condo in a major city (with low vacancy rate and good selection of tenants to make things easy). I don’t think it’s unreasonable to look for 9-10% (accounting for all costs) and it’s not without historical precedent.

    AwesomePeople, I think you need to pay yourself first when it comes to calculating cap rate and that involves you paying yourself rent. Your time managing the property is not free; if you want apples-to-apples to what professionally run real estate investment firms are doing, and the crux of this interesting post, you need to treat your own property and your tenancy as a business in itself.

  16. 16. NorthernAlex

    Q: What is a good offer?
    A: When you feel a little bit embarrassed.

    Whenever you close the deal, you will always think: “So, would he accepted a lower offer, too?”

    I still do. :-)

  17. A deal maker once told me that the best deal is when both parties feels like they lost something. :)

  18. 18. James

    This makes me want to own an apartment building and earn some extra cash. this just might be my next investment opportunity.

  19. 19. Pete

    Great article. I own 3 rental properties and I’ve never done these calcs. Moving forward I’ll have a better idea of how to calc/estimate a offer price.

  20. 20. Greg

    Great article. Like Pete I also own a couple of rental properties and had done my own calculations. If figured there must be some standard calculations but didn’t know where to look.

    Thanks!

  21. I am in the same boat. I have owned rental properties in the past, and I’ve always wondered about using cap rate calculations etc. I simply made sure the properties were cash flow postiive after all expenses, but perhaps should have set “goals” for what my return on investment should be.

  22. 22. Rachelle

    Some one really smart with spreadsheets should help me modify a speadsheet I already have that has a circuitous error on it somewhere I can’t find. Then everyone could have a blank copy of it and bingo bango!

    Any volunteers?

    P.S. Thanks everyone :) I really want my articles to help small investors and landlords who don’t know this kind of stuff.

  23. 23. Andrew F

    Rachelle,

    I’m handy with spreadsheets. PM me at the forum (andrewf).

    Based on what I’m seeing here, I find it hard to imagine any unit in a condo passing muster as having a high enough cap rate. As it is, most of them can’t be cashflow positive.

  24. 24. Greg

    Rachelle,

    I could also take a look at your spreadsheet if you’d like. I’m guessing that FT can get my e-mail address from this post.

    Either way, I’d be very interested in having a copy when it’s complete.

  25. 25. Joel

    Rachelle,

    Thanks for the formulas. I always enjoy your posts! I would love a copy of the excel sheet if you need a hand fixing it or if the other people already got it done that would be good too! Like said above I’m sure FT can get my email or I can PM you on canadian money forum. (72camaross). I’ve finally narrowed down the area I wanted to invest in and the price range I’m looking at so these formulas will help with offers for sure!

    @NorthernAlex, I like your idea of a good offer. I was told something similar which was basically to make sure they say ‘no’ and go from there. I’ve made offers (on other things) where they didn’t even hesitate and I immediatly knew I could have got it for less… :)

    Keep up the good work Rachelle!

  26. 26. Rusty

    Hi Rachelle,

    I’m currently looking at an investment property in downtown Ottawa. I found a couple places that match my criteria (upscale, good neighborhood, extremely low vacancy rates and a positive NOI) however the Cap rate is only 0.054. In the examples you (and others) have used the cap rate is 0.08. Is 0.08 the ideal cap rate one should be looking for?

  27. 27. Rachelle

    Rusty,

    The first thing you need to verify is that it’s an honest cap rate with vacancy, property management and maintenance factored in.

    I have the cap rate spreadsheet well worked out and you can get a free copy of it if you email me or Frugal Trader.

    The second thing that makes a world of difference is the interest rate. If your cap rate is 5.4% and the best you can do on the mortgage is 6% you will lose money. If you can get a mortgage for 4% you make money. Once you play with the spreadsheet this becomes apparent.

    The other factor is potential are the apartments below market? Is there an upside? As tenants move out can you make more dough? Can you afford to wait? Can you feed your building cash for a while if something goes wrong?

    These are all important considerations that must be weighed into the Buy or No Buy Equation.

  28. 28. Sputs

    Rachel,

    Excellent post and discussion following. I’m sure I am missing something. I don’t see the payments to the principle in the calculation. By paying down your principle, aren’t you creating equity which in turn should be used for the ROI calculations?

  29. 29. Rod

    Rachel,

    Quick question about your ROI calcs: for the kitchen replacement example, would the ROI not be ($100 x 12 months)/$2000 = 60%? ( Just wondering if I am missing something.)

    Thanks.

  30. 30. settleme

    I loved the advice that you gave about checking to see if the place was a drug den. I had a relative that had bought a used trailor to find out later that he could not pass a drug test. He is not the type to use drugs and so further investigating came into play. When testing was done, they found that there had been Meth in that trailor and it was everywhere in all the woodwork and furnaces and carpet. Needless to say that trailor is ashes now.

  31. 31. Russell Work

    I notice in your cap rate and roi spreadsheet in determining net profit, that the mortgage payments are counted as an expense. is this because you only take out an interest only mortgage. if it is a conventional mortgage, you don’t appear to have made an allowance for the principal, and hence increase in equity in my portion of the property. can you explain how to take this factor into account? thanks

  32. 32. Grateful Reader

    Dear Mr. Concerned Reader.

    I too own a number of properties throughout the city. The difference is you don’t know how to treat people. I gladly pay people that find me deals make me money, and invest time for me. And when it looks like they have went the extra mile, I have no problem stepping up and paying people for their time. I am certain that with your attitude not only do agents run from you but I am also certain that you have very poor relationships with others especially in your marriage. Put people first and you can never go wrong. Give it a try Mr. Concerned Reader and when you look in the mirror one day you just might, like what you see. Keep up the great Post Rachelle

    Sincerely,

    Grateful Reader.

  33. 33. Grateful Reader

    Keep up the great posts Rachelle.

    Thanks

    Grateful Reader

  34. 34. Keeping People Honest

    Grateful Reader just happens to be Rachelle. Especially to compliment her 2 year old article twice, and make accusations that Concerned Reader is a poor human being.

    Go take a look at her web site, where she has degenerated into disgusting personal attacks against her own readers.

    Better luck next time Rachelle. And please go ahead and tell me I am wrong.

  35. 35. Rachelle

    Dear Keeping People Honest,

    You are wrong. Glad to help you out with this issue.

    Happy Friday!

    Rachelle

  36. An investment property should generate adequate rental income with minimal expenses and provide consistent positive cash flow. The biggest mistake investors make is they look for property in markets and locations where prices have been increasing in the recent years rather than looking for property that has intrinsic value, better cash flow and in already excellent condition with roof, plumbing, heating and cooling components that are less than ten years old with enough life span left to minimize major expenditures in next five years.

    When deciding on a property, investors should use four important professionals.

    First very important professional is an experienced real estate agent to find the right property.

    The second important professional is an expert building inspector who can provide a comprehensive property condition assessment.

    The third important professional is a smart mortgage broker to find the best suitable financing.

    The fourth important professional is a very caring lawyer to look after the legal aspects.

    Investors also need a competent accountant to manage the accounting and provide with proper tax advice and a reasonable building contractor to perform the routine maintenance and renovations.

    Just because a property is affordable, doesn’t mean it’s a good investment. Investors should have vision, be able to look past the esthetics and look for the necessities around the property to become a prime rental property including parking, laundry and proximity to amenities including public transit. It is always better to have the ability to add value to the property without having to make a major renovation. Investors should look at neighbourhoods that are not yet established, but have all the ingredients to be in the future. If the property is vacant upon possession the investors have the ability to renovate, increase rents, and pick your own tenants. Avoid investment properties without adequate parking.

  37. 37. ritchie lindsey

    I am new to this arena, so I had to look up the term Cap Rate. For anyone that is interested, I found a good definition here https://realestatemetro.com/real-estate-terms/cap-rate

  38. 38. Jacob Sampson

    I have been a real estate investor since about 05. I currently have 9 units. I love these sorts of posts if only because they provide another way for me to analyze my investments. This cap rate idea seems overly complicated, though it sounds like a lot of people use it so maybe I am wrong.

    I am wondering about the flaws in my personal process. When evaluating a purchase I take the rent and subtract the mortgage(15 year note), taxes, insurance and I allow for 30% of income for vacancy and maintenance. What is left has to give me at least a 20% cash on cash return when compared to the downpayment and closing costs that I put into the purchase. I am in Topeka, KS so maybe property is cheap enough to make this feasable but I use the caprate spread sheet and I feel similar to allowing a bank to tell me what sort of mortgage I can afford. I would never take out as large a loan as they say I can afford and I wouldn’t pay for the properties what the spread sheet said would be profitable.

    Any thoughts?

  39. 39. Rachelle

    Dear Jacob,

    It sounds like properties where you are now are profitable and feel free to buy as many as you can at those prices. In Toronto, where I am I haven’t seen a property that passes this cap rate spreadsheet for several years. It’s to keep people from making mistakes.

  40. 40. MStar

    Hi Rachelle,

    What about new commercial condo properties, where almost every expense item (TMI plus utils) is handed over to the tenant to pay (these are dtown properties, where there is demand). So, then how do you calculate a proper ROI or cap rate…when expenses are near null. I know there will be some miscellaneous expenses that come up and maybe prop management…but again for commercial retail/office leases…the investment prop seems to run itself most of the time (remember these are new – so very little wear and tear for reparis / maint that would come up in an older unit perhaps).

    Can you please comment on these types of properties and how to do the calculations for them…as they seem to good to be true. Only downside i can see is potential long vacancy period to get a quality tenant in there at the beginning…but then its at least 5 yr leases

    Thanks for your help!

  41. 41. Rachelle

    Hi Mstar,

    The calculation is the same, just put 0 where there is no expense. I have no idea why anyone even owns a residential rental property with the tenant friendly laws and lousy returns.

    As you mention there may be long term vacancy at different times when the unit turns over with commercial tenancies.

  42. 42. Al

    Thanks for this spreadsheet. I would like to point out that leasehold improvements are an upfront expense and not an ongoing operating expense. As such, leasehold improvements should not be part of the cap rate calculation.

  43. 43. Maher

    Some vendors remove the management fees and vacancy rate from the operation expenses to show higher cap rate , if I discovered this after giving an offer , do you think this should be enough to change my mind especially adding the cost for both will drop the cap rate from 7.3 to 6.5 % ?

  44. 44. Nick

    I’m pretty sure the mortgage payment amount is calculated incorrectly. It is not accounting for Canadian semi-annual compounding.

    Perhaps the spreadsheet is from the US? Either way it should fixed since this is a Canadian article.

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