BiggerPockets

Hey guys,

I am interested in buying an apartment complex. How do you determine which markets are good to invest in right now?

How do you find out about market cap rates across the states?

What would you do from a top down approach? State, to city, to zip code, to the actual apartment building.

Peter is right...that information could easily fill a book...

Here's one to start with that I highly recommend:

http://books.google.com/books?id=KJqVwO4CKJoC&dq=vollucci+how+to+buy+and+sell&printsec=frontcover&source=bn&hl=en&ei=-Jb8S6fCHML78AbF8aSUBw&sa=X&oi=book_result&ct=result&resnum=4&ved=0CCQQ6AEwAw#v=onepage&q&f=false

Talk to one or more of the national CRE firms.

Search and study Loopnet listings.

Read and study a lot. Commercial (multiple-family included) is more complex and mistakes can be devastating.

Your ideas are good, too, though I think you may find the highest cap rates where the job growth is the worst.

I am not investing based on the cap rate alone.

What I am trying to find out is market cap rates, not individual apartment cap rates. When I look at a property I want to know if that property is over or under priced. The market cap rate is one metric to determine this. I also want to find the highest cap rate possible to cover debt service. But it seems to be impossible to find market cap rates by any category because of the fact that the real estate game is such an inefficient market. I might have to start calling CCIMs individually.

This link of unemployment rate might be useful for someone looking to locate a good market to buy a commercial property too: http://en.wikipedia.org/wiki/List_of_U.S._states_by_unemployment_rate

By you saying actual data is not readily available indicates that real estate is not efficient. If you look at any thing with a ticker symbol, you can do research with just your computer. You can see the effects of supply and demand by the minute. You cannot do this with real estate. But I am not here to argue. Thank you for your suggestions.

Let's get more detailed. Which non-biased websites or links in particular indicate 'increased employment, increased job growth, increased immigration, favorable employer incentives.'

Mike, do mind elaborating on why Who you are buying from is most important? I assume you are talking about how motivated they are or how distressed the property is?

Why does market value matter?

If I'm getting a 100% cash-on-cash return, does it matter if I'm paying "over market value" for the property?

Of course not.

I'd happily pay over market value for an opportunity like that!

Look, you're getting good advice from seasoned investors...you can choose to listen or you can choose to argue...it's up to you...

Couple websites for solid market data:

www.economy.com _Moody's website on economic data.

www.realpoint.com / http://corporate.morningstar.com _national statistical data

www.trepp.com -CMBS stats/ CRE deal tracking/ national mortgage data

www.realpage.com -formerly Yieldstar. Great multi-family data.

Last thing, call a big broker and ask for their annual market report for the type property you want to buy (apt/self storage/hotel). They publish annual reports with tons of market data like CAP rate, sales, defaults, jobs, etc.

I'm a CCIM-candidate and believe if you use a CCIM broker, it will be worth your time.

Good luck and good hunting.

Kyle

You seem to care more about getting deals below market value, but when it comes to income producing properties, I don't see why market value really matters.

The goal is a strong return on investment, and if you can get a strong return on investment while paying over market value, then who cares that you paid over market value.

Thanks a bunch kyle!