Multifamily (25 units and up) Cap Rates in Boise, ID

7 Replies

Hello All,

Not sure if there are any commercial multifamily brokers in the Boise forum, but I was wondering what the B and C class market cap rates were currently. Boise has great market data, and I'm originally from Boise -- potentially investing in this area, even amidst the craze, seems like an interesting idea. 

On a side note, does anybody know where many of the B or C class multifamily properties are around Boise? Garden city comes quickly to mind, though I haven't really been on the lookout whenever I return home. 


Any help is appreciated. Thank you!

@Tyler R. I am not a commercial broker but I have been involved in multi-family deals here in the Boise area. You would be hard pressed to find anything above a 6-7 cap currently. There are a number of value add deals that will pop up from time to time. I know of some 4-plexes going up in the Nampa area that claim to have a 6.8 cap but I haven't looked at the numbers myself just yet. Dive me a call. I'd love to talk. I'll PM you.

Hi @Tyler R.  

Commercial multifamily is my niche. Cap rates in Boise are in the low 5% or even high 4%'s depending on whether you're using current or proven market rents. Sometimes it also depends on whether the listing agent is realistic about their market rents. We have more 4plexes than most markets, and there's not much of a cap rate boost as you go bigger, where supply is lower. 

Nampa has slightly higher returns, even after the higher taxes there, but I'm pretty skeptical about being able to personal validate any listing claims of a 6.8% cap rate on a new build 4 plex, after I run the numbers. I'll look again for those and buy them or sell them to clients if it's legit. That's more like the cap I might expect to find on a historic (read 100-year-old) home with lots of charm (aka oddities). 

I have a 90's built 25-unit listing that we priced at about a 6.8% cap rate. It's Section 42 LIHTC, so we listed it at the high end of caps. We had multiple full price offers, however the deal fell and it's back on market. 

Garden City is happening. It's priced as though it has happened despite the surrounding trailers, but if you find a deal there, it's worth a look. I know of an off-market retail (recently vacated) with office or apartment above, in the heart of Garden City, where parking is the challenge/hurdle to overcome.  It will sell list in the low $400's.

I'm curious what cap rates you are finding elsewhere? Or what cap are you willing to tolerate in a growth market like Boise? 

Happy Investing!

StacyA McBain

@Ryan Petersen and @StacyA McBain , thanks for the feedback and information! As mentioned, Boise really was not my radar until I saw some market data and figured I'd ask some questions. While a good deal is a good deal, individual 4 plexes are something I'm trying to bypass, though perhaps a portfolio of 4 plexes is something I'd consider. But even then, I'm searching markets with B properties at least at a 6% cap rate and C properties at least at a 7%, though this will be hard in today's economic climate. I do know these cap rates do exist in some mid size cities in the midwest and SE, thus I'm more or less settled on targeting a market in those areas due to multiple positive factors for multifamily real estate. 

I have the support network and, between myself and partners, should be able to raise the capital for a mid size deal, ultimately trying to partner to close on a 25-50 unit, maybe even 75 unit if the numbers make sense. I'm focusing on investing for cash flow first, while trying to capture as many factors as possible in a market that will favor appreciation. My strategy is to buy a B - C class property that is unprofessionally managed or has some deferred maintenance that will allow me to force equity through increasing NOI, and then refinancing the equity out and repeating the process.

I'll likely be coming through Boise around the New Year to see friends and family if either of you are interested in getting  a coffee or a beer.  Thanks again for all of your help!

I don’t know anything about them but www.fig.us is listing 12 and 20 plex projects in meridian half way between Boise and Nampa that they want you to believe will produce 6.5%.  I had just happened to have gotten an email from them a couple days ago when I saw your post about Boise. GL

-B

 @Bill Brandt Do you know if they're selling that one vacant or leased up? Their proforma operating costs seem low/that cap rate appears pretty ambitious. That said, the location is strong and could warrant buying into at a lower/more conservatively calculated cap rate. 

@StacyA McBain

Sorry Stacy I don’t. They emailed me because I had signed up for info a few months ago or more ago after hearing about their strategy of building new fourplexes Either on a podcast or here on biggerpockets and it’s something that interested me. 

In fact I searched biggerpockets for fourplex investment group and there were a couple hits including a reviews thread that seems positive and info going back years.  Should pop up if you search google to BP for them  LMK if you find anything out good or bad or move forward  I’d have to sell a property to 1031 in to some kind of 4-20 small multi but it looked interesting enough