Cap Rate for small Plex in Montreal

[Axel Lafortune]

Calling out BP investors in Montreal, Canada

What Cap Rate do you consider good and bad for a small Plex (5 or fewer units) in Montreal, preferably on the island?

Thank you,

[Sam Bellerose]

Hi Axel, 

Your question would be best answered with a more in depth perspective on what it is you are looking for in a property? How risk averse are you? What is your budget ? Would you like to BRRRR (Most people on bigger pockets do) ? Do you want to buy and hold? Etc...

Generally any multiplex with a cap rate of at least 5%-6% would be a good investment on the island depending on the location!!!!! As you may know, Montreal island has neighborhoods that are in high demand, others that are up and coming and some should be avoided. Your Verdun investment should be a good one as that neighbourhood will only go up in value and demand is high. The nice thing about Montreal is the amount of infrastructure work being done and while it may seem like it will never finish, it will one day! 
This being said, cap rates do not take certain elements into consideration such as mortgage amortization and appreciation and while the 2% rule is a quick and effective indicator it does not always mean it's a good or bad investment property. I suggest taking RIO or IRR, cash on cash and ARV into consideration when evaluating your properties.
Best of luck!