Joel DyckReal Broker SK Ltd.
Saskatoon · From the topic map

How do I value an income-producing property?

An income-producing property is valued by combining comparable sale prices from Saskatchewan REALTORS Association data with the property's own net operating income: actual or achievable rent minus realistic vacancy, property taxes, insurance, utilities and maintenance. When the income and comparable-sale approaches diverge sharply, an input, often the vacancy allowance, usually needs a second look.

Start with the income statement rather than the listing description. Gross rent minus a realistic vacancy allowance, property taxes, insurance, utilities not covered by tenants and ongoing maintenance produces the net operating income a lender or investor will actually underwrite against, and that number is frequently smaller than a seller's advertised gross rent suggests.

Then confirm legality, because income a City file does not support is income a lender will not count. Only a permitted unit under the City of Saskatoon's rules produces rent an appraiser can credit, and the Residential Tenancies Act, 2006 governs how existing leases transfer to a new owner.

Comparable sold income properties round out the picture by showing what similar cash flows have actually traded for recently, which corrects for a market that may value income differently than a pure math exercise would suggest. Get your hand-reviewed valuation from Joel Dyck.

Get your hand-reviewed valuation from Joel Dyck.

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