Two Ways to Price a Property

Condos were priced on hope. Buildings are priced on income.

The difference between those two pricing models is not a matter of opinion. It is arithmetic, and this page shows it.

The Two Models

Every property is priced one of two ways.

Most investors were never shown the difference — because for two decades, one of the models kept producing the right answer. Then it stopped.

Model One · Comparable Sales

Value is whatever the last buyer paid.

The price is set by the most recent transaction, not by the asset.
There is no income beneath the number — the unit can sit empty or rent at a loss and the model does not notice.
It rises on sentiment, and it falls on sentiment.
It works until the next buyer does not show up.

Model Two · Income

Value is what the building earns.

NOI ÷ cap rate = value
The price is derived from the rent roll — verifiable income, line by line.
There is a floor under the number: the income itself.
It is repriced by leases, not headlines.

The Record

What the first model left behind.

The people who bought new condos were following the model they were given. The model was the problem — and the record of what it produced is now public.

77%

of investors taking possession of new condos carried negative cash flow — averaging −$597 a month.

CIBC · Urbanation

~$284

per square foot — the gap between pre-construction pricing and resale value at delivery.

Urbanation

58.2%

of housing starts from January to April 2026 were purpose-built rental — the market rebuilding itself around income.

BMO

The Second Model, Worked

Price a building the way a lender does.

Take an ordinary twelve-unit walkup in a secondary Ontario market — the kind of building that rarely makes headlines. Its value is not an opinion about the future. It is a calculation from the rent roll.

One Walkup, Priced on Income — Illustration

12 units × $1,450 average in-place rent$208,800

Less 3% vacancy allowance$202,536

Less 40% operating costs → net operating income$121,522

Value at a 5.00% cap rate≈ $2,430,000

Illustrative only — round numbers, ordinary assumptions. Not a listing, an appraisal, or a projection of any outcome.

Now the part the first model cannot price. Suppose market rent for these units is $1,700, and the in-place average is $1,450 across long tenancies. Each unit that turns over adds $250 a month — roughly $1,750 of net income a year, which at the same 5.00% cap rate is roughly $35,000 of value per unit. Across all twelve units, that gap is worth on the order of $419,000 — measurable, purchasable, and priced into nothing but the leases. Underwriters call it loss-to-lease. It is the difference between buying a number and buying an income. And if you hold investment capital inside a professional corporation, how that income is taxed has its own arithmetic — covered in The $50,000 Problem.

Interactive Tools

Run the math yourself. Your capital, your assumptions.

The Underwriter applies this arithmetic to a real building; the Financing Modeler and the Compounding Modeler carry it into financing and equity over time. No email required.

Open the Calculators

The Generational Wealth Series · Volume I

The Builder’s Guide

Seven chapters on Ontario multifamily for the investor building long-term wealth — the mechanism, the market data behind this page, the financing, and the discipline. Written by a three-generation multifamily family. Delivered as a PDF, by email.

McKinney Multifamily Group

Three generations of the McKinney family have bought, financed and brokered Ontario apartment buildings. Liam and Sean McKinney bring $250M+ in combined career transaction volume, principal-led, across the province. If the arithmetic on this page is how you already think, we should know each other.