On a multifamily, what cap rate would be best to consider?

[C. Raine Williams]

On a multifamily what cap rate would be best to consider?

I recently been told that the best cap rate to consider on a multifamily of 100+ units should be about 7%-8%, with an occupancy rate of 75% to 80% in order to qualify for the best LTV term loan possible?

I know location is important, however, is this a true estimate on cap rate for multifamily units?

Raine

[Joel Owens]

Hi Raine,

There is no single answer. Your profile says wholesaler. Are you trying to sell deal to buyers or purchase for yourself??

Every buyer is different on how much they want to leverage, what bank loan rate they can live with, what type of tenants they want to deal with, quality of the asset and location, and annual return expected.

I have some clients that do not like war zones but will take a decent area over a great area for a 10 to 11 cap. Conversely I have clients that choose to have more affluent tenant base and less drama in a nicer area for a 7 to 8 cap.