Based on information I've seen, it looks as thought the market might ease up a bit in the latter part of the year and there will be more inventory out there.

Do some investors buy sight unseen based on cap rates?

Based on all your inputs I'm definitely going to walk away but I appreciate everyone thoughts and advice.

I don't know all of the particulars of your situation, but based on a couple of possible scenarios, here are some suggestions:  1.  

Commercial real estate investing is largely a matter of analysis regarding financial data, conservative projections based on that data, and market/feasibility.  

Evaluate each "deal" based on your verifiable numbers, design capabilities, and return requirements. 

Do you have a full knowledge of the RTA and how the LTB both interprets and makes rulings based on it. 

The deal seems off based on just the numbers but it never hurts to try, they can only say NO

Quick question before I give advice -- based on the cost numbers ($28K purchase, $50K rehab, additional $15-20K rehab, plus any purchase/holding/selling costs), it appears that there's a good chance you're going to break even or lose money on this deal.Are you prepared to do that? 

Some possibilities MAY be redirecting water away from the structures, or jacking the structures up and building a base underneath, but most likely the property is in a flood zone and these would not be effective solutions.