I am considering purchasing a large Apartment complex in a small town, and wanted to get the BP community's input on such an investment.
Here is the opportunity:
32 units (30/32 rented)
11.2% Cap Rate assuming 50% expense ratio.
Built in 1997 - in good condition
The town is about 45 miles North of Columbus, OH (where I live). According to the 2010 census, the population is 2,047 (up from 1849 in 2000 census). There is no major industry in the area, but there is a decent public school system according to the Ohio High School Ratings. Can small town maintain a demand for apartment living? When 4+% of the town is living in this complex (assuming all bedrooms are occupied).
Looking forward to the feedback.
There's a couple colleges up that way. Is it close to one of them... could be a supply of tenants assuming you are willing to deal with them :)
I'd really like to know the answer to that as well. Also, how do you value an apartment building in a small town if there aren't other similar commercial properties nearby? Do you expand the scope to include nearby towns? Do you look across the county? Seems like calculating the cap rate could be tricky.
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