To expand here is a link to the York Couny explanation:https://www.yorkcountygov.com/_fileUploads/forms/H...The example given really illustrates it.$100K (owner occupied)4% and  .2142 = $857/yr $100k (n-o/o)6% AND .3916 = $2,350/yrAlmost exactly 3x.Again varies by county but many counties now have a different millage table

I guess what I wanted to illustrate (mostly to myself) is what my actual CAP rate is has turned out to be as opposed to what I *thought it was* when I bought it.

Now that is the extreme case, but still it illustrates the point.

I think there have been a couple of interpretive bulletins that have been issued since (to further illustrate the CRA's position).

The following examples illustrate the rules of this paragraph (d).

This illustrated the state of the market last summer.

My illustration was not meant to be all encompassing, but simply to describe a series of transactions and the cashflow produced from it.

Here are some links that @David Doyle - a plumber - uploaded to illustrate this:http://www.biggerpockets.com/files/user/journeyman7243/file/island-vent-drawingshttp://www.biggerpockets.com/files/user/journeyman7243/file/island-sink-twohttp://www.biggerpockets.com/files/user/journeyman7243/file/2nd-image-island-venthttp://www.biggerpockets.com/files/user/journeyman7243/

Let's illustrate with actual numbers on a deal I am working with.The house is worth $265K and it needs $20K in repairs.

So many episodes illustrate the creative ways people starting with no capital can utilize the value they bring to the table to get plugged into a deal.