Buying in Quebec carries one charge that exists nowhere else in Canada in the same form: the droit de mutation, known as the welcome tax, payable to the municipality after closing. Quebec also splits property tax into municipal and school lines, and adds provincial sales tax to mortgage insurance premiums. Each one belongs in the cash you need and the payment you carry.
Price a property from a target cap rate, or get the cap rate from value and income. Fill any two fields and the rest computes; there is no mode switch.
What the property is worth in the market. In the cap rate formula it is the price NOI is measured against: value equals NOI divided by cap rate.
All income the property collects in a year before any expenses: rent plus parking, laundry, storage, and other fees.
The recurring costs of running a property: property taxes, insurance, maintenance, utilities, and property management fees. Debt service, depreciation, capital expenditures, and income taxes are not operating expenses.
The share of rental income lost to empty units and turnover, expressed as a percent of potential rental income.
Effective gross income minus all operating expenses for one year. NOI excludes debt service, depreciation, capital expenditures, and income taxes.
Net operating income divided by property value, expressed as a percent. It states the unlevered annual return a property’s income produces at a given price.
The same 296,960 of net income, priced across a range of yields. The marker is your 5.71% rate.
$512,000 gross → $296,960 NOI
Illustrative calculation only. Not advice and not a valuation.
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The rest of this suite. Each answers one question.
The welcome tax, or droit de mutation, is a one-time duty your municipality charges when a property changes hands. It is calculated on brackets of the higher of the purchase price and the municipal assessment, and the bill arrives after closing rather than at the notary. Budget for it separately: it is not part of your down payment and it is not collected with your mortgage payment.
Plain-language definitions of every term this calculator uses.
Net operating income divided by property value, expressed as a percent. It states the unlevered annual return a property’s income produces at a given price.
Effective gross income minus all operating expenses for one year. NOI excludes debt service, depreciation, capital expenditures, and income taxes.
All income the property collects in a year before any expenses: rent plus parking, laundry, storage, and other fees.
The recurring costs of running a property: property taxes, insurance, maintenance, utilities, and property management fees. Debt service, depreciation, capital expenditures, and income taxes are not operating expenses.
The share of rental income lost to empty units and turnover, expressed as a percent of potential rental income.
Going-in uses today’s NOI and today’s price. Exit is the rate assumed at a future sale. Buyers underwrite exit rates above going-in rates to stay conservative.
What the property is worth in the market. In the cap rate formula it is the price NOI is measured against: value equals NOI divided by cap rate.