Quote from @Barry Ruby:
@Marco L.
Marco,
Are you looking for for a value add deal or a property that has little or no deffered maintenance?
In either case, the cap rate to focus on is the acquisition cap rate which represents the UNLEVERED year 1 cash on cash yield you will receive before introducing debt payments.
Given the current cost of capital, introducing -7% debt against a -4% acquisition cap rate will surely trash your after debt coc.
The only way a 3 or 4% acquisition cap can work is with a healthy value add development plan.
Looking for something that is more or less renovated and not needing much work just turn key. I'm assuming I'll get a lower cap on that and my only way to add value is by increasing rents annually based on the provincial max amount allowed to increase rents?
I'm not finding much unrenovated even that is even near 4% cap (net income divided by acquisition price). Not wanting to look into smaller towns or communities up north I assume it'll be a tough battle to find something worth while that doesn't need too much work.
