Are my numbers to conservative?? And, what should be included when calculating a cap rate?

[Matt McCourry]

Hello Multi-Family investors!

I am posting my struggles here because Multi-Family is my primary interest and I own 4 units (2 student housing duplexes) and want to grow my portfolio.  However, outside of student housing, I can't find a decent deal at an 8% cap to save my life!!!

Therefore, could somebody please weigh in on how they calculate their cap-rate and if mine is too conservative???

Heres the way I calculate it,

(Gross Scheduled Rent) - (Vacancy rate (at least 5-6%)) = Operating Income

(Operating Income) - (Repairs & Maintenance + Utilities + Taxes + Insurance + Management Fees (at least 8%) + Replacement reserve (capX)) = NOI

Then I simply divide the asking price by the NOI (Asking Price / NOI) to get the cap rate.

I can't find anything above 5 or 6 % at best, am I doing something wrong or does the MLS just suck that bad??

I am in the Myrtle Beach market BTW....

Thanks Guys!

-Matt