Multi-Unit Apartment Buildings
Real estate investment is one of the best ways to grow wealth and multi-unit apartment buildings are a great income-producing investment for a number of reasons. Demand for units by renters is increasing while at the same time the cost to build new multi-unit properties is prohibitively expensive for developers. Exposure to vacancy risk is mitigated in properties with more units as a single vacancy represents a smaller portion of expected income.
How Multi-Unit Apartment Buildings Are Evaluated
In Ontario the Municipal Property Assessment Corporation (MPAC) determines market cap rates for each region by property type through market analysis. Then a median cap rate is established for each area and property type*. An individual investment property of that type is valued by dividing the net operating income for the property by its regional market cap rate. This means that the profitability of multi-unit apartment buildings determine their value. Small changes to the income or expenses for a building have a large impact on their value.
The Importance of Accurate Property Analysis
When working with a client who is selling a multi-unit property I recommend specific steps that can be taken in order to optimize the performance of the building to prepare it for market. This can have a significant impact on sale price.
For my clients who are interested in new investment properties I look at the details that are not presented by the seller to establish the true value for a property. Often issues such as tenant quality or hidden expenses can be missed and drastically change the expected return.
*For details on how MPAC determines market cap rates for multi-unit properties see: https://www.mpac.ca/sites/default/files/imce/pdf/Multi-Residential.pdf
32 Moira St. - A 12 unit building in Belleville
CENTURY 21 Lanthorn Real Estate Ltd., Brokerage*
19 Elks Street, Picton, ON K0K 2T0
31 Bowery Street, Picton, ON K0K 2T0
149 Main Street, Picton, ON K0K 2T0
Belleville, ON K8P 3R5
1,728 living area
2,640 living area
14265 41 Highway, Cloyne, ON K0H 1K0
28 Monogram Place, Quinte West, ON K8V 5P8
441 Craig Road, Quinte West, ON K8N 4Z6
652 Dundas Street E, Belleville, ON K8N 1G7
130 Main Street, Picton, ON K0K 2T0