Analyze single-family rental investments in Alberta, Canada.
Investment Grade
An 'A' grade property is a high-performing, robust investment. A CoC return of 10% or more means your capital is generating an excellent return. The monthly cash flow of over $200 provides a substantial safety buffer, making the investment resilient. A Cap Rate of 5% or higher suggests you've found a fundamentally sound asset that is priced well against its income.
A 'B' grade signifies a very good, dependable investment. The CoC return (7%+) is strong and provides a healthy profit. The monthly cash flow of over $100 gives you a functional safety net for minor issues. The Cap Rate (4.5%+) is solid, indicating a fairly priced property. This is a reliable vehicle for long-term wealth creation.
A 'C' grade property works on paper, but carries more risk. The cash flow is positive but slim, offering no real buffer for unexpected costs. The CoC and Cap Rates are modest. This might be acceptable in a high-appreciation area, but it's a higher-stress investment that requires careful management.
A 'D' grade is a clear warning sign, usually due to negative cash flow. The property costs you money each month, making it a liability. This grade signals that the deal is fundamentally flawed based on your numbers and should be avoided or radically renegotiated.