My experience in countries and cities that depend heavily on tourism has been excellent (Mexico, Greece, Thailand, New Orleans, Galveston). my visits to places less dependent on tourism have been more mixed.

So you'd be looking at high potential rental income, cheap properties or, even better a combination of the two.That prime candidates would be:Mexico and the Dominican Republic: cheap properties, mass tourism, occupancy all year long, closeness to North America, direct flights from North America, the US and increasingly Asia, strong international and domestic tourism and tourists coming from diverse locations.Southern Europe (Portugal, Spain, Italy, Greece): properties aren't necessarily that cheap (some are) but you have mass tourism there as well.Then you have secondary markets like Colombia or Brazil.

I am a Canadian investor but I’m asking this question for my sister who lives and owns a farm in Ocala Florida.My sister’s neighbour is selling her farm and I am trying to show my sisters options on how to buy the farm.

I'm just a few hours away from Cleveland.I've never lived in LA, but I have lived in Greece, which has a similar climate to southern California.

If I ink out a deal with the neighbour to buy her house at $100,000.00 and FMV is presently $105,000.0, then right off the bat, I'm in the money $5K (though I probably paid for that in the price of the option).The time value is more complicated and, in the worlds of commodity futures and stock options factors in the volatility of the market and the length of the option period.  

The only conclusions I can draw are that Greece is an anomaly because of their restrictions with being in the Eurozone.

But, what if a building was upgraded to a higher level than it's neighbours -- would it attract a better, higher-paying tenant?

Only problem is it's from Chicago not Greece.

Why not simply have a chat with the neighbour?

If the property next door to yours, and the one on the other side, and the six other comparable assets which sold in the neighbour during the past 12 -18 months averaged out to a market CAP of 7.5, then you know where your property will need to be priced (within 1 -2 standard deviations depending on where in the spectrum you determine the property fits) when it goes to market.CAP rate are only really meaningful when  you are trying to set a sale price in a given market - we don't even look at them when we are purchasing.If you read my post above, you will see I suggested finding our the market cap rate to garner an idea of where the stabilized property should be priced when it sells.BTW:  GRM is another single-point-in-time ratio that, on its own, should carry no more water than a CAP rate in your analysis.