ROI on 250 units

[Steve Pool]

I have a 10 percent interest in a nice apt complex in an upscale part of Milwaukee. We have run 97% occupancy for several years and so have competing properties. It is in great shape. Our property manager has suggested some changes. I need to find out what an appropriate Return On Investment would be for this type of property since we have had it for many years and it is at 25%LTV. Any help greatly appreciated!

[Tod R.]

Why do you suppose your rents are so low compared to competition? Is your occupancy greater than competition? What about rental concessions?

Your ROI depends on several factors, including level of debt and whether you overpaid for the property plus improvements.

In our multifamily deals, we focus more on appreciation, but we look for an annual cash on cash of anywhere between 5-10%.