CRE Question - Purchasing Option between multiplex and Medical offices
I am in Toronto, Canada....so the prices are...well...nuts, eh!

My question is approach, as to what I should do. 

Option 1
I looked at a multiplex, 12 units $5 million. I can only put down one million, and that's a big debt burden (~$206,000). I expect NOI to be about $ 270,000. Cash flow about $60,000. Cap rate around 6.8% This is kind of an ok area, so I dont think the rents will go up much with the tenancy laws here. I can increase the curb appeal, put up proper fences, redo the parking lot, some landscaping for the outside, and start renovating from the inside as and when tenants leave.

15000 sq ft, fully tenanted, annual expenses, separately metered, expect annual expenses including TMI to be about 50000.


 Option 2
There is a large brand new (built about 3 years ago) hospital near a large population and projected incredible growth area (live in this neighbourhood, so I can confirm) and there are two offices (not buildings, just two offices in a medical building). A total of 1 million price, 1 tenant each (already tenanted long term). I expect NOI to be about $56,000 if I put 25% down. I can buy it outright if there is a reason to do so. 

Demand in this area is high, they are tenanted at this time. Cap rate appears to be 10.6% Have reached out to my real estate agent.



Option 3
Look for a better deal.

This will be my first Commercial venture. I am leaning towards option 2 because it is better than parking cash in a bank, and I can sell and move on when a new opportunity comes along.

Any and all advice is appreciated for this newbie.

Thank you

CC

Edit: added details

Edit 2: Added info from Agent


*****UPDATE FROM Agent*******

Option 2
The rent they gave earlier was 5000 monthly. Turns out that was the combined rent for both units, and I was assuming it was for each. So never mind.....Option 2 is off the table.
[{"id": "hek73wa", "text": "Depends on how strong the medical market is in your area and how high the current rents are that the tenants are paying. What is the CAP on the medical units? You will have a larger tax deduction (depreciation) on the units versus the medical units. Are the medical units stand alone or part of an association in a larger building?", "replies": [{"id": "hel0iow", "text": "Thanks for responding. \n\nVery strong medical in this area. CAP is 10.60 from the info I have (is being verified). They are stand alone.", "replies": [{"id": "hensn4g", "text": "The medical sounds like a safer bet with a better return.", "replies": [{"id": "heohdyi", "text": "Appreciate it, but I found out after I posted that I will have a negative cash flow if I were to go with the medical simply because the rent is half of what I was led to believe before.\n\nSo I am now stuck trying to find another seal, perhaps option 1.\n\nPatience and perseverance, I suppose :)", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "heka2da", "text": "US West Coast commercial experience. May not apply up there.\n\n\\#2 no info on sf, parking spaces, utility expenses, NNN.  I suspect difficult to quickly fill.  #1 sounds it is priced out for you.  We have much issues with tenants who do not want to pay rent or believe it is OK to pay min since 2020 let landlords to go into default.  350,000 landlords unable to collect rent seeking compensation. Better paid tenants most work from  home and they are away from high rent areas. Some moved to low rent states 1+ year ago. Many boycott to go back to work at the office. Industrial, commercial rent also is depressed.  Residential rent is off by -30%.  Expect large inventory of default coming up in the future. The price on them are nuts. Often the good deals are buy occupied troublesome units with tenants behind at discount hoping court to approve eviction.", "replies": [{"id": "hel12eb", "text": "Appreciate your reply\n\n13000 sq ft (100x130 ft)\n12 open parking + 3 covered\nUtilities are individually metered\n\nCurrently expenses including TMI are at about 50000 annually (to be verified). \nAll of Toronto is crazy in terms of inventory (high demand). It is fully tenanted right now. (Not aware of lease terms yet).", "replies": [{"id": "helc317", "text": "In northern CA NNN is about $3-4 dollars/sf. Strip mall has vacancies.", "replies": [{"id": "hempler", "text": "I agree, I know most of the area, but fully intend to read up on stats, walk the area and engage local agents", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hel2q9r", "text": "Is it possible for Option #1 the NOI for year 1 is expected to be $340k? Debt is typically beneath this so potential cashflow would be \\~$134k if this is the case. 6.8% going in CAP feels very high for a hot market like Toronto, but other than visiting often I don't have any facts to support this.", "replies": [{"id": "hel3rbh", "text": "NOI for option 1 is expected to be ~$270000, potential cash flow of about $60000. Thank you", "replies": [{"id": "heuai6y", "text": "Unless my quick take is wrong (quite possible) you may have transposed a number in the OP then, $5M sale @ 6.8% CAP produces a different Y1 NOI.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]