Updated over 5 years ago on . Most recent reply
A Question about CAP rate valuation.
I'm looking at a Multifamily that is what I call a classic investor grade property. This question has to do with the CAP rate.
Current asking price is based on a CAP rate of 8.66. The average CAP for the city is about 7.6. I'm looking at a couple of negotiation options that will raise the CAP a couple more points. My question is, if raising the CAP rate to lower the purchase price could be considered similar to the MAP for SFR's?
John
Most Popular Reply
Do you have any data for multifamily comps in the area? How are the demographics of the area? How is crime? What does employment look like? I think there a lot of metrics you can use in order to negotiate a better price besides what you will discover during due diligence. In my opinion you need to compare apples to apples, so multifamily CAP would not compare to SFR.