cap rate for multi family

4 Replies

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.  

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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@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.