Serious: Analysing Value-Add/Distressed Deals the Right Way

[Daniel Lozowy]

Here's the problem: I keep hearing two different things.

I'm based in Montreal, Canda and the game here is mostly to buy distressed apartment buildings, drive-up the NOI and RE-FI (the cap is really low, so it's almost impossible to buy for CF). How do you analyze those deals? 

What I do: 1. find the current value (with the cap), 2. then make projections after I've optimized the NOI. 3. Trial and error with the purchase price (with a sale in year 5) until I get my minimum returns; and that's my max price. 

What some people say is this: After Repair Value - Repair Costs - Closing Costs = My Max Price.

What do you guys think? How do you analyze those types of deals ??