TSX:REI.UN - Post by User
Comment by
hroark7on Jun 05, 2023 11:05pm
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Post# 35481663
RE:Reit calculations?
RE:Reit calculations?Most people and companies as well do not just straight up buy a property or pay it off completely.
Up until the big rate hikes last year, typically you wanted to take advantage of the cheap money and leverage to juice your returns.
Theoretically you could buy commercial property outright but let's take Toronto multifamily right now. according to the CBRE Q1 2023 report, that's yielding just under 4%.
Why would you take the risk and the headache of management when you can get 5% low risk interest right now. Unless you have leverage it just doesn't make sense, but right now leverage is expensive so it still doesn't make sense, unless you're holding it long term and you believe that rents will go up a lot (and the property value will go up with it) and current cap rates hold.