Yes. Cap rates are a reflection of local demand, perceived risk, and income potential. A stabilized property in a high-demand urban core like downtown Toronto will typically have a lower cap rate (higher price relative to income) than a similar property in a secondary or rural market.

Yes. Lenders are highly diligent with income properties. To support the valuation, they often require executed leases, rent rolls, and an Appraiser's Market Rent Analysis to ensure the income being reported is sustainable and aligned with current market trends.

Not always. Value in the income approach is driven by Net Operating Income (NOI), not just gross rent. If a property has high rents but even higher operating expenses (utilities, taxes, maintenance), the final value may be lower than a more efficiently managed building with moderate rents.

Appraisers rarely use "actual" vacancy if it is zero. Instead, we apply market-based vacancy assumptions (typically 3–5% for the GTA) to determine "Stabilized Income." This accounts for the natural turnover of tenants and provides a more realistic long-term value for lenders.

Both. While the Income Approach calculates the value based on financial performance, the Direct Comparison Approach is used to confirm that the resulting price per unit or price per square foot aligns with what other investors are actually paying in the open market.