Start with the income
Review the current rent roll and understand how the reported income is produced. Confirm contract rent, additional recoveries, vacancies, incentives, arrears and any income that may not continue under new ownership.
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Evaluate the income, the property and the risk.
A commercial investment is more than a cap rate. The durability of the income, quality of the leases, condition of the property and future marketability all matter when assessing value.
Search commercial investment property →Read the leases
Lease structure often determines the quality of the investment. Review term remaining, renewal rights, rental steps, operating-cost recoveries, maintenance obligations, assignment provisions, security and any unusual landlord commitments.
Assess tenant and vacancy risk
Consider tenant mix, concentration, lease-expiry timing and the likelihood that existing space can be re-leased. A strong current NOI can change quickly if a major tenant leaves or a large rollover is approaching.
Understand operating expenses and NOI
Normalize the property's income and expenses before relying on a cap rate. Compare management, repairs, utilities, insurance, taxes, recoverable expenses and reserves against realistic ongoing ownership costs.
Inspect the physical asset
Deferred maintenance can materially change investment returns. Roofs, HVAC, boilers, paving, building envelope, electrical systems and other capital items should be considered alongside the purchase price.
Consider market position and exit strategy
Evaluate location, zoning, competing inventory, replacement alternatives and future buyer demand. A good investment should make sense not only on today's numbers, but also under reasonable future leasing and resale assumptions.
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Evaluating an investment opportunity?
We can help compare the asking price, income profile, competing properties and Central Alberta market context before you commit to deeper due diligence.