cap rate for multi family

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cap rate for multi family

Jodi RhoadesPro Member
Investor · North Pole, AK · Member since 2017 · 22 posts · 19 votes

I have been looking at multifamily units and wanted to know what is a good cap rate for multifamily units and what are some things I need to be careful about when I am analyzing these types of  properties.  

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

There is no such thing as a good or a bad cap rate. A cap rate is merely a reflection of the underlying risk of the asset and the market.  Higher class properties, higher demand locations will have lower cap rates to reflect the lower risk associated with the asset and market. Lower class properties in weak demand locations will in turn have higher cap rates to reflect that market and assets higher risk.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    There is no such thing as a good or a bad cap rate. A cap rate is merely a reflection of the underlying risk of the asset and the market.  Higher class properties, higher demand locations will have lower cap rates to reflect the lower risk associated with the asset and market. Lower class properties in weak demand locations will in turn have higher cap rates to reflect that market and assets higher risk.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    3Reply
  • Immanuel Sibero
    Carrollton, TX · Member since 2015 · 415 posts · 371 votes
    7y

    @Jodi Rhoades

    A good cap rate? No such thing! It's about as real as Santa Claus... but of course already know that... (living in North Pole and all... LOL)

    Kidding aside, @Russell Brazil pretty much explained it.

    Cheers... Immanuel

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  • Jamie Rose
    Real Estate Agent · Anchorage, AK · Member since 2017 · 294 posts · 182 votes
    7y

    @Jodi Rhoades Yet - what may be of further help to you - would be to know what some average CAP rates are in other areas so you have comparison. I believe fair CAP Rates in very desirable areas can range from 2-4 - think prime Seattle. In Anchorage - you can see CAP rates range from 4-10 depending on neighborhood - condition, etc. with 6-8 the most common.

    In North Pole - you should be able to find CAP rates that range from 6-12 I would imagine - with 6-10 being very common. Feel free to reach out for more specifics.

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  • Cailyn C.
    Real Estate Agent · Atlanta, GA · Member since 2018 · 12 posts · 0 votes
    7y

    Love the humor here. thank you for the info as I have been searching the answer too.

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