1. What is the Income Approach?

The income approach is a real estate valuation method that estimates property value based on its ability to generate income. It's particularly relevant for Canada immigration purposes when demonstrating the value of investment properties.

2. How Does the Calculator Work?

The calculator uses the income approach formula:

Where:

• \( NOI \) — Net Operating Income (annual income after operating expenses)
• \( Cap\ Rate \) — Capitalization Rate (expected rate of return)

Explanation: This method converts a property's income stream into an estimate of its market value by dividing the net operating income by an appropriate capitalization rate.

3. Importance for Canada Immigration

Details: For immigration purposes, accurately valuing investment properties is crucial when demonstrating sufficient net worth to meet program requirements. The income approach provides a standardized method accepted by immigration authorities.

4. Using the Calculator

Tips: Enter the property's annual net operating income in CAD and the appropriate capitalization rate as a decimal (e.g., 0.05 for 5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good cap rate for Canadian real estate?
A: Cap rates vary by location and property type, but generally range from 4% to 8% in most Canadian markets.

Q2: How is net operating income calculated?
A: NOI = Gross Rental Income - Operating Expenses (excluding mortgage payments and income taxes).

Q3: Is this valuation method accepted by IRCC?
A: Yes, the income approach is a recognized valuation method for immigration purposes when supported by proper documentation.

Q4: Should I use current or projected income?
A: Use current, verifiable income figures supported by rental agreements and financial statements.

Q5: How often should I update this valuation?
A: For immigration purposes, valuations should be current (within 6 months) of application submission.