Investor · Los Angeles, CA · Member since 2019 · 32 posts · 9 votes
I'm looking at a couple of deals on market and wondering what competitive returns are. Looking at 3 duplexes and a triplex as one property, is 7% cash on cash good? Is it slim? What criteria are y'all looking for to determine a good deal (I understand this is subjective)? Hopefully I can learn some more context to this kind of property! Thanks.
Real Estate Broker · Albuquerque, NM · Member since 2015 · 281 posts · 232 votes
2y
Are all 9 units on contingous parcels? What's their age? The CAP rate is subjective and a marketing CAP is a broker's explanation of what the seller provided in his proforma.
Is the CAP actual numbers or proforma numbers? You will have different operating costs and you need to determine how you will manage the property and expenses. It will be different than the current owner.
What's your exit strategy? Are you looking for a value add exit or a long term hold?
What are other 9 unit properties selling for in the area?
CAP rate is just one metric to tell you to pass or dig deeper. It's not THE it number. There's a lot to determining if an asset will fit your investment goals beyond CAP rate.
Investor · Central Virginia · Member since 2020 · 393 posts · 253 votes
2y
"is 7% CoC good" I would look at the solds in the last 30 days and try to see what the CoC return was for those with your assumptions. 7% might be good for someone outside of Central FL, but a local investor might know 9 or 10 is a better number. You have to find average and then build from there.