Kingston Cap Rates/Market

[gsicilia]

What are the going Cap Rates in Kingston now a days for properties with 10-20 doors? I know there are a few Kingston Forum/Rein members that can maybe expand a little on the Kingston Market.

 

[invst4profit]

Being one of the non REIN members from Kingston I can only say I don`t know.

Cap rate isn`t relevant to me because I don`t pay much attention to a sellers asking price. I make all my offers based solely on cash flow. Due to rent control in Ontario every building is different.

Sorry I can`t help.

 

[gsicilia]

Fair enough. Let me see if I can rephrase. Assuming rents are going between $700 and $800 what do you expect to pay per door? for a multiplex 15- 20 units. Or do you have another measurement that can tell help me determining a price since cash flow really depends on interest rate, down payment and amortization and doesn`t necessarily convey whether you can overpay.

 

[tbarcier]

Between 60`s - 70`s per door.

 

[invst4profit]

For rough estimates the city does not matter.
There are numerous different measurements. 60 to 70 per door or monthly income equal to or greater than 1% of purchase price.

Another rough way to estimate is to assume monthly expenses to equal 50% of monthly income leaving the remaining 50% to cover mortgage payments and positive cash flow. Calculate the mortgage payments (principal and interest) based on 100% of the purchase price at 5%-7% interest and your remaining positive cash flow should be a minimum of $100/month/door.
This method is rough and only provides a bench mark to determine if a property is worth looking farther into.

Knowing the monthly income gives you a point to work back from to estimate the amount a property is worth.

 

[tbarcier]

In the 60`s to 70`s per door is what you would expect to pay to purchase a 15 to 20 unit building in Kingston. That is based on recent sales.

 

[gsicilia]

Thomas, Greg

Thank You for the input. All things being equal where are the parts of Kingston you would stay away from?????

 

[invst4profit]

I personally stay away from student housing, over priced and to management intensive, or any low rent areas ( Montreal St, Weller ave, the Heights etc.) Again although low rental has a higher return it is far more management intensive.

It really depends on your target market and how hands on you intend to be in your investment.

It also depends on your experience level. If you have managed people before and are well versed with the RTA then you should have a fairly good idea of what you want.

If you do not have any experience you may be way over your head starting with a 10 unit in the wrong part of town.



If you are new to the business I strongly recommend you join this forum:



http://myreinspace.com/f/

 

[tbarcier]

There are little pocket areas to stay away from for sure, however for this type of property you will be limited to certain areas of the city. Is there a specific building you have in mind already? If you would like PM me your contact details and i`ll be happy to discuss the city with you.

 

[gsicilia]

Thomas sorry for the delay I have been out for the week, but would love to chat.

 

[tbarcier]

Sure no problem, send me an email [email protected]