My Multi-Family Property has a 14% cap rate. So what?
I’m one year in to owning my 4 unit multi-family property. Bought it for $209,000.
i have dramatically remodeled the building in under a year and doubled the gross monthly rent income.
As of right now I have a cap rate of 14%. Remaining remodel costs and associated rent increases bumps the cap rate to 15%.
A commercial lender in my area (Charleston, WV) said they value property around a 10% cap rate, which would put the value of the property (subject to appraisal) at around $458,000.
Someone help me out. What do I do with this thing? There’s a gigantic delta in anticipated selling price and the money I’ve put into it. We’re talking about a $130,000 difference in just over a year! That would ghost my student loans and I could start all over! Maybe the flip and sell is a terrible idea? How can making 130k in under a year be terrible?
Then again, my cap rate is really high. Average cap rate is 9-10.5% here.
Do I try to refinance? If so, how does that work if I wanted to buy another building but I don’t have any liquidity (besides an oh oh fund for emergency repairs).
Or, do I just sit on the property, collect my rent checks, and hang out?
Thanks for any and all advice!