Tiny Markets and no Market Cap Rates

[Branton B.]

Analyzing a few 5+ unit deals in an ultra small market, where even local commercial brokers and lenders say “we don’t really use market cap rates, we just order a third party appraisal” to determine value. I have “actuals” and have calculated exact NOI, but have no market cap rate to divide by to project current value and ARV once repositioned. Anyone else run in to this? Solutions?

[Jeff Greenberg]

I would be interested to see what methold that the appraiser used. Income approach doesn't work without a cap rate. On a very small property he could comps. If you have NOI and sale price you can find the cap rate for that deal.