First Maritime Post - NB Forum

11 Replies

Since we now have Provincial sub-forums on BP, I am going to suggest we collapse them as follows:

- Atlantic Canada

- Québec

- Ontario

- Prairies & the North

- British Columbia 

My argument for the collapse is there are not enough active BP members in the Maritime/Atlantic Provinces, Prairies and, certainly not, the Territories to warrant individual provincial/territorial forums.

Hi, I want to start investing in New Brunswick. I am looking at some 6 unit buildings to start off, what is the average cap rate for Moncton and Fredericton area? 

@Gamble Li

Around here (Fredericton), the inventory on 6-10 unit buildings is pretty tight - though there are a couple for sale at the moment in a part of the City that is a little less desirable. I cannot tell you precisely what the current market CAP rate would be in that class of property - namely because I care little about CAP rate when underwriting - but sales of slightly larger buildings (15 - 30 units) have been down in the range of 5 - 6% over the past couple of years.

Nothing a small hike in interest rates wouldn't help.

Moncton is a little more varied. Around the Université you will see asks around 5 - 6% CAP, some of the older buildings a little further removed - or in the SW end - may be on the market for 6 - 8%. Again, the CAP is secondary when you are underwriting an acquisition - yes, it's helpful to know what others are paying for a cash flow, but I'm more concerned with what the rate of return will be on the deals I am pursuing.

Thanks Roy, for the quick reply and input. I am brand new to real estate investing, just looking to diversified my investments and get the first property going to learn the game. 

What rate of return should I be aiming for 6 unit buildings? Is financing different than residential properties? 

@Gamble Li

It will really depend on where you are.  There were a couple of (11/12 unit) buildings for sale in Miramichi a month or so ago - I briefly glanced at them and decided they price was too high.

Technically, buildings with 5+ units are commercial properties, but most commercial lenders have little interest in deals smaller than $1 - 2M.   RBC was (and may still be) financing 5 & 6 unit properties as residential (20% downpayment and residential mortgage rates).  A local credit union may do the the same.

Thanks for the info! There is not a lot of opportunities in Miramichi, although we have very low vacancy rates here, the buildings are very old and run down, and is own by just a few individuals that been holding them for pass 20+ years. The good deals usually get snap up before it ever goes to market. 

@Gamble Li

The story is the same anywhere, the best properties/deals never see a listing.  It pays to find a {commercial} broker operating in your area who knows the market.  Once s/he knows you are looking and ready to purchase, the can float properties in your direction.

@Chris Baxter

The decision at BP was to keep separate forums for each province and territory, rather than adopting the groupings commonly used in Canada.   These days, I suppose Alberta could generate enough traffic to merit its own forum, but the Maritimes and Newfoundland and the territories certainly do not have the population base to sustain one for each province/territory.

I should go back and do some analysis and see how many folks are actually posting in the province specific forum versus the Canada forum and how that correlates to where they are located.