The Resale functionality allows you to simulate the resale of the property in 5 years. The data entered here will be used to calculate the return on investment.
- Brokerage Fees
Indicates the percentage of the value of the property at the beginning of the sixth year (Year 1 being the current year) allocated to brokerage fees. If you wish to take into account the legal fees, land survey and other expenses, you can include these in the percentage of brokerage fees so as to obtain a more realistic estimate of the resale value. The taxes (QST and GST) will be automatically added to this amount in the resale forecast report.
- Resale Price
Represents the value of the property at Year 6. The property's value is calculated across the previous 5 years. The default price given is impacted by the net revenue variation, inflation and depreciation of income and expenses detailed in the Analysis Parameters section of the software.
- Annual Appreciation
This rate represents the increased value of the property on a yearly basis. This data is obtain based on the yearly net income increase.
- Resale Price Calculator (Approximate)
The resale price of a property is quite tricky to determine after 5 years. The price will be an approximate estimate since we can't really foresee the future of the market. To establish an approximate resale price, we suggest using one of the 4 methods below:
- Manual Calculation: By using this method, the Resale Price Evaluation above becomes accessible. You can input data manually.
- According to Data: Using this method, the software will calculate an approximative resale price according to the net revenue variation, inflation and depreciation of income and expenses detailed in the Analysis Parameters section of the software.
- Capitalization Rate (Cap Rate): Indicates the overall rate of return on investment, not based solely on the down payment indicated (net income of the 5th year / resale price). (ex: Net income of the 5th year is $30,000. By putting the Cap Rate at 10%, we estimate a resale price of $300,000 ($30,000/0.1) .
- Annual Appreciation: Rate used to calculate the yearly increase in value of the property. Simply input the approximate rate and the resale price will be visible after clicking on the Calculator icon.
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