Cap Rates for Large Apartment Complex are Lower. Why?
I am a new investor in New Haven, CT. I notice the cap rate for large apartment buildings (50+ units) tend to price at much lower cap rates than smaller apartment buildings (4-10 units). I'm referring to cap rates in the range of 5% to 5.5% for large apartment buildings vs 7.00% to 8% for small apartment buildings. I am comparing buildings in the same neighborhood and in similar condition. Any ideas why this is the case?