CAP rate for 5-10 unit property in Portland, OR?

Question

Derrick Aragon · Answer

@Marcus Mathews General terms and the "class" of properties is hard to give advice on. Purchasing a class B or C property that has an ad value component might sell for a very low cap rate do to the existing rents.

How old the property, differed maintenance, tenants, all that is mix that will determine that cap rate as well as what the comparable product has sold for in that area.

Are you looking to buy? What CAP rate are you looking for?

@Benjamin Ficker can help you out he is a good broker.

Joe Hughis · Answer

Hello @Marcus Mathews The SE corridor of Portland, OR still has varying caps for 5+ multi-family that range from 4.7% up to 6.5%.  That being said, if you were just looking to analyze a deal, the larger pocket of properties seems to be hovering between 5-5.5% Cap. Hope this information helps.

Derrick Aragon · Answer

Cap Rate depends on product, Joe gave a good note.

Marcus Mathews · Answer

@Joe Hughis It does, thank you for the info!

Benjamin Ficker · Answer

Thanks for the shout out @Derrick Aragon

You're answer is spot on.  The cap rate that someone buys it at (in this market) doesn't have much to do with the value, its what cap rate they can get it to in the next 6-12 months.

Most people are ready to buy if they see a way to get it to a 6 cap.

Marcus Mathews · Answer

@Derrick Aragon

I know an upper middle aged gentleman who has started selling his properties, and he owns an 8-unit complex along the 205 corridor in SE. I recently let him know that my business partner and I would be very interested in buying it from him, as he owns it free and clear and I think we have a good chance of getting him to carry the note on it. I'm just trying to get a good idea of what would be a fair price to offer.

I would say it's a class C property, and it definitely has deferred maintenance. I think the rents are probably under market, but not by too much because of the condition of the property.

Marcus Mathews · Answer

@Derrick Aragon Would it be accurate to say that in general the lower the class of the property, the higher the cap rate should be?

CAP rate for 5-10 unit property in Portland, OR?

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