Cando valuation and CAP Rates

Hello everyone

I am evaluating an investment in Cando on monthly and daily rentals for holding period of 10 years.

The property is located in a affluent location of Rio de Janerio, Brazil. 

My NOI for monthly rentals comes to 300USD and 500USD for daily rentals escalating by 3% per annum. The comps cap rate is 6%

Since monthly NOI for daily rentals is 66% above than monthly rentals - my sales value in the terminal year has no match to the sales value for the monthly rentals. 

It is making no sense to have a different sales value for the same property only due to changes in the rental model.

I would like to have 5%-10% overall valuation difference. I have already taken a low occupancy of 55% for daily rentals but my sales value in the terminal year is still way off.

Can any one suggest quick fixes to that? Is it a good adjust cap?

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Comments (4)

Mar 24, 2022 - 8:13am
hammadkhan, what's your opinion? Comment below:

Thank you for your reply. I have a local brokerage firm on board - they will manage the property. I have included all the expenses in Opex they have mentioned in their typical contract. On a conservative side - I have included insurance and capital reserves as well. But still my exit year sales value comes way off than it is in a standard monthly lease model.

Mar 24, 2022 - 2:31pm
Lwidbwadksnbd, what's your opinion? Comment below:

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