1. They Don’t Understand Leverage Some of your friends aren’t investment-minded. They may be risk-averse or they espouse an experience-focused lifestyle and spend all their money “enjoying life”. But you also have friends who are focused on building wealth who insist that real estate is not a good investment. Some of these folks take risks that promise huge returns, like …

Misunderstanding cap rate, short for capitalization rate, is a favourite pastime of many realtors and novice investors. Too often I witness a lack of understanding of investment analysis within the real estate agent community. My concern is that novice investors may be making purchase decisions with inaccurate expectations for return on their investments. This article examines the relationship between real …

This article is the first in a series examining and illustrating the impact of various factors on the returns generated by a real estate investment. If you remember one thing, let it be that the formula is more complicated than reported in the write-ups for virtually all investment property listings. For example, the “cap rate”, or the cash flow calculated …

Some day I will have to write the complete story on capitalization rates in real estate. Knowing me, that will be a long article. There are many angles to cover, from its use and mis-use, misunderstanding and misapplication to the basics of what it measures and what it means. Most importantly, I’ll aim to provide a practical guide to help …