Professional · Bradenton, FL · Member since 2017 · 37 posts · 6 votes
Hi everyone
I've been looking for 7 months now for a small apartment complex with 6 units or more with no luck.
Problem is prices are too high to justify cap rates of existing listings on Loopnet/MLS,
Where do I look to find a decent deal? Also thinking about some idea's on maybe improving upon a dead listing to improve ROI. Anyone thinking outside the box in this hot market? love to hear them!
I am pre-approved for 750K, looking in west coast of Florida St Pete,Tampa,Bradenton,Sarasota. Need a 10 cap, at-least 100k in gross income.
Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jonathan Dempsey Best of luck finding a 10 cap in an area where the chances of getting stabbed are less than 100%.
You live in a very hot market and it's hot for a reason - high growth prospects, diversified economy and a great weather (might not feel like it at this time of the year).
You could find this mythical 10 cap creature by going to a war zone or buying a piece of absolute crap but then the 10 cap returns would only be on paper i.e. you will have little to no chance of collecting most of the rental income due to you.
You should use multiple sources: brokers, property managers, RE attorneys, other investors, and so forth. In other words, join REI clubs and network extensively.
In addition, you can buy lists from companies like listsource and go direct to sellers.
Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jonathan Dempsey Best of luck finding a 10 cap in an area where the chances of getting stabbed are less than 100%.
You live in a very hot market and it's hot for a reason - high growth prospects, diversified economy and a great weather (might not feel like it at this time of the year).
You could find this mythical 10 cap creature by going to a war zone or buying a piece of absolute crap but then the 10 cap returns would only be on paper i.e. you will have little to no chance of collecting most of the rental income due to you.
Investor · California, CA · Member since 2016 · 117 posts · 26 votes
7y
@Omar Khan
Finding a 10 cap ain’t gonna happen in a stable market as mentioned above. But is it worth waiting? Find a 7.5 cap and go with it. Still will cash flow and you gain experience and start making money. Loopnet is void of good listings imo.
Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Tony F. Looking at cap rates for value-add deals is completely asinine (within the bounds of reason). The whole reason why one is acquiring under-performing assets is because they are UNDERPERFORMING.
It might comes as a shock to most people but most assets are not valued solely off financials (i.e. income based approach). The seller/listing broker picks the highest of comps or income-based approach which means that in this market the valuation based off comps is picked.
While it is prudent to wait and sounds like good advice, I don't think the OP is running an opportunity cost analysis on his funds (i.e. should I wait now or buy later) and neither is he looking to get another headache by buying a high cap rate asset in a war zone which looks good on paper but sucks in reality.