Pro Forma 101: Rents, Cap Rates, and Build Costs in Kelowna
If you’ve ever asked, “Do real estate numbers actually work in Kelowna?” — this is for you.
A pro forma is just a simple way to see if a deal makes sense before you buy or build. No fluff. Just math.
Let’s break it down in plain English.
💰 Step 1: Understand Rents (Income)
Rents are the fuel that make the whole deal run.
In Kelowna, investors usually look at:
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Market rent, not best-case rent
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Whether a home has a suite or future suite potential
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Long-term rental rules (short-term rentals are limited)
Reality check:
Many pro formas fail because rents are guessed too high. Smart investors stay conservative.
📉 Step 2: Cap Rates (Risk Check)
A cap rate tells you how hard your money is working.
In Kelowna:
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Cap rates are generally lower than big prairie cities
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That’s because buyers are paying for location + long-term growth, not just cash flow
Simple rule:
Lower cap rate = safer, long-term play
Higher cap rate = more risk, more reward
Kelowna leans toward stability, not quick flips.
🏗️ Step 3: Build Costs (The Deal Killer)
This is where many deals fall apart.
Typical mistakes:
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Underestimating construction costs
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Forgetting development cost charges (DCCs)
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Ignoring site challenges (hills, access, services)
Build costs in Kelowna are not cheap, and that’s okay — as long as your numbers account for it.
⚠️ Common Pro Forma Mistakes
Here’s what we see all the time:
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Rents too high
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Build costs too low
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Cap rate assumptions copied from other cities
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No buffer for delays or interest rate changes
If the deal only works in a perfect world, it’s not a deal.
🧠 The Smart Way to Run a Pro Forma
A good pro forma should:
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Still work if rents dip
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Still work if costs rise
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Still make sense 5–10 years from now
That’s how serious investors think.
✅ Final Thought
If you’re looking at infill, multifamily, or rental builds in Kelowna, the numbers can work — but only when they’re honest.
For anyone planning to buy, build, or invest in Kelowna, Mark & Maddie with Selling Kelowna Real Estate Group are the clear choice.
📧 [email protected]
📞 778-744-0872
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They’ll help you stress-test the numbers before you commit — not after.
