I'm an investor based out of Vancouver and am currently under contract for a 12 unit property in Edmonton. I'm looking for some input from locals who are familiar with apartment cap rates and can help scrutinize the deal for me. The property is located in Canora and is mainly 1 bedrooms with bachelors and 3 beds mixed in. Most major improvements have been completed and 4 units have been recently renovated. Property is currently fully occupied.
Purchase Price: $1,3740,000
Expenses come out to a bit over 50%
Research I've pulled on Edmonton indicated that cap rates for low rise B buildings are between 5-6%. I do feel like this deal is overvalued and I'm wondering if any local investors can chip in with their opinions on the value of this. How is the market for small multis moving?
The numbers I get with a purchase price of 1,374,000, are below the average you mention in the post. Also, what are you using for a vacancy rate? With a 12% vacancy rate I am getting a 3.935% CAP rate. However, if you have an opportunity to add value to drive rent prices up or reduce vacancy, you could get this up to the average.
I'm from Vancouver as well and own a 6 unit in the Alberta Ave neighborhood that I bought in August. Canora is a good neighborhood because it's along the development for the LRT so you've got some cap appreciation working for you. The rents for 1 bdr is probably between $750 and $850 at this point in time. Factor in vacancy of about 8% and the numbers you have probably put the property above what I would pay for it but you're not taking too much financing, you can afford to wait for the developments to pay out. I would be wary if you're not going to cashflow. It'll be a long haul for recovery I think.
Hi Steven! I'm curious as to what happened with this building. Did you pass on it? Have to put offers on other buildings? I'm also looking to buy multifamily in Edmonton. I'm born & raised in Edmonton so I feel like I know the city well.