I had it wrong.So here's a compressed version of the situation: Dad bought and flipped the house.

I have watched the exodus of capital from the bond market move into real estate given the historically low yields and drive the cap rate compression that we are seeing (not the only reason).  

The issue is the deals that they are looking at are so compressed when it comes to CAP rates that if you take on any debt it turns the deal upside down. 

I've had success with cashflow rentals in Seattle by getting off the beaten path- there are established investors bidding up the price (and therefore compressing the cap rate) on many small multi-families, but those same investors are not going after large 6-9 bedrooms SFHs that you can rent by the room to young professionals and college students.

Compression.     

It would be too risky for us to venture into southern Ontario at this point - someone like Doug, or yourself, who are local stand a better chance of finding the needle in the ever growing haystack.If I were looking for rental properties in the GTA now, I would be conducting my analysis to confirm the property could carry itself under a 10-20% compression in rents and/or a property devaluation of 30-40%.  

I've had success with cashflow rentals in Seattle by getting off the beaten path- there are established investors bidding up the price (and therefore compressing the cap rate) on many small multi-families, but those same investors are not going after large 6-9 bedrooms SFHs that you can rent by the room to young professionals and college students.

I believe there are opportunities to purchase rental properties in those area now that will see increases in values from cap rates compressing and some of those areas potentially changing from rental areas to areas where you might be able to attract first time homebuyers in the future.

In the last year, compression of margins is occurring in my market because prices of retail houses are falling and prices of wholesale houses have not. 

I've had success with cashflow rentals around Seattle by getting off the beaten path- there are established investors bidding up the price (and therefore compressing the cap rate) on many small multi-families, but those same investors are not going after large 5-9 bedrooms SFHs that you can househack by the room or split up with an ADU / MIL.