Here's some back of envelope math for a six-plex in a decent location in Calgary.
Rent - $1200 per month per unit = $86,400 per year
Expenses - $38,400
- water - $2500 per year
- electric.- $2000 per year
- gas - $5000 per year
- waste - $1500 per year
- taxes - $10,000 per year
- maintenance - $5000 per year
- vacancy - $2500 per year
- insurance - $3000 per year
- landscaping - $1500 per year
- cleaning - $1500 per year
- misc - $900 per year
- management - $3000
Operating profit: $48,000
Cap rate - 4%-5%
Cost - $0.95m-$1.2m
From this, assume every 25 years you have to spend $250,000 on capital expenses. So your actual cash return is 1% lower than your cap rate.
So your cash income is 3%-4% a year. Call that a dividend. You can try to improve that rate with leverage, but it doesn't really make a difference because cost of borrowing is 2.5%-3.5%.
Capital appreciation is the other driver. I'd assume 2-3% a year.
So total annualized return is assumed at ~6% without leverage and ~9% with 50% leverage. It's not substantially better than stocks. Maybe a bit better, but even if you're "hands-off" you can expect quite a bit of "hands-on" work.
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