Specialist 路 Kirkland, WA 路 Member since 2013 路 1k+ posts 路 817 votes
So I've got a Commercial Broker sending me leads from MFR in Washington, he's operating mostly in the Tacoma - Olympia area. But I'm blown away by the prevailing cap rates going on. Can anyone shed some light on the reason that cap rates are so low in the area?
Sold Comps
Year Built -- 1980, Cap Rate -- 5.53 Price - $899,000
Year Built -- 1978, Cap Rate -- 6.71 Price - $1,385,000
Year Built -- 1974, Cap Rate -- 6.81 Price - $1,900,000
A 40 year old building, in University Place with a less than 7% cap rate? The only conclusion I can draw is that it's Seattle Investors who want something they can drive who are paying all cash. What are your thoughts?
Real Estate Broker 路 Kirkland, WA 路 Member since 2018 路 549 posts 路 411 votes
7y
@Trevor Hatchard there are quite a few mobile home parks up here still. Several are listed right now but they are mostly smaller ones full of single wides. The nice big ones are being gobbled up by corporate buyers. I'd love to buy a mobile home park myself but personally I would only touch one that was on sewer and most of the ones I'm seeing are septic. DM me if you want and I'd be glad to email you a quick list of some parks I've seen here in Western Washington.
So I've got a Commercial Broker sending me leads from MFR in Washington, he's operating mostly in the Tacoma - Olympia area. But I'm blown away by the prevailing cap rates going on. Can anyone shed some light on the reason that cap rates are so low in the area?
Sold Comps
Year Built -- 1980, Cap Rate -- 5.53 Price - $899,000
Year Built -- 1978, Cap Rate -- 6.71 Price - $1,385,000
Year Built -- 1974, Cap Rate -- 6.81 Price - $1,900,000
A 40 year old building, in University Place with a less than 7% cap rate? The only conclusion I can draw is that it's Seattle Investors who want something they can drive who are paying all cash. What are your thoughts?
Unless those comps came from your own due diligence you can't trust them.
The games played with 'published' comps in commercial and multi-family properties are legend.
Well, without getting into the financials of the property I have to start my examination on the pro-forma numbers given. And at sub 7's I couldn't even get excited. But that's okay I found one today here locally that had a cap rate of .667%
Investor 路 Ojochal, Costa Rica 路 Member since 2013 路 287 posts 路 164 votes
12y
@Giovanni Isaksen Sorry for the slow reply but I didn't get notified of your question. I sort of fell into the Cleveland market via an investor buddy of mine. Bought a MF complex in Cleveland and spent so much time there I started to explore the market, did a lot of networking, and started finding lots of great deals. There weren't many people buying there 2 years ago, but it's gotten a lot more competitive since them.
I'm interested in 10%+ cap rates and Washington. I've got a network that wants to pay all cash for drive-able properties in the Greater Seattle Area (probably tri-county) and they will probably go for lower cap rates.
But for my personal investments I get happier at 10+ caps.
LOL - I happen to think that repositioning = deal as well. However, there are lots of folks here who are into turn-key style of investing and for whom repositioning is anything but a deal. Make no assumptions and know who you are talking to :)
Specialist 路 Kirkland, WA 路 Member since 2013 路 1k+ posts 路 817 votes
12y
Here's my current investing thought-line... when investing in 50-300 unit apartments with the 10/30 (is that how most people denote the 30 year amortization with the 10 year balloon?) mortgages, it's a churn... you keep buying repositions and churn through the properties in about 2-5 years so that you can get up into the low cap class A 500+ where the banks will lend over a 30 year term. So if you want to scale and scale quickly, using financing, you need to find those repositions and force equity increase by all the normal standards.
Real Estate Broker 路 Kirkland, WA 路 Member since 2018 路 549 posts 路 411 votes
7y
@Trevor Hatchard there are quite a few mobile home parks up here still. Several are listed right now but they are mostly smaller ones full of single wides. The nice big ones are being gobbled up by corporate buyers. I'd love to buy a mobile home park myself but personally I would only touch one that was on sewer and most of the ones I'm seeing are septic. DM me if you want and I'd be glad to email you a quick list of some parks I've seen here in Western Washington.
Rental Property Investor 路 Western Washington 路 Member since 2018 路 151 posts 路 60 votes
7y
@Geordy Rostad Agreed! I don't own an MHP (yet) but in all of the research I have done staying away from septic systems is a good idea for new investors.