Cap rates in Cleveland for large Multi Family

9 Replies | Cleveland, Ohio

@Vic Delgado

Difficult to say without looking at a buildings financials, but that being said it's possible to approximate using public data.

I first pull the Cleveland parcel data-set from the Cuyahoga County Open Data website.

I then filtered down by number of dwelling units greater than or equal to 5 and with a recorded transfer of ownership in  Jan 2018 or later

The reason I chose 5 unit is because the number of buildings with 100 or more units is very small, and we need a sufficient sample size to get meaningful results. 

I then associated each parcel with a census tract to get the census reported median gross rent for each property. 

Lastly, I computed the cap rate by taking the monthly median rent, multiplying it by 12 and again by 50% (imputing 50 percent operating expense ratio). I then divided this by the reported sale price of the property. 

This is what resulted:

High Res Link

As you can see, Multi-Families in the Edgewater neighborhood seem to command a cap rate of around 10.4%.

This is based on buildings with 5 or more units, so the cap rate may differ at the 100 plus unit level. 

I did wash the data for obvious outliers, such as derelict buildings that were purchased for next to nothing and likely don't have a current certificate of occupancy. 

I think this should give you a better idea of what the expect in Edgewater as well as give you a snapshot of the Cleveland as a whole. 

Hope this helps! 

Originally posted by @Bob Prisco :

@Vic Delgado   about 6- 8%  at best ,, I  am referring to NET who cares about gross 

Good luck 

Aussies used to always talk about gross rental returns.. never could understand why they did not focus on net.

Originally posted by @Bob Prisco :

@Jay Hinrichs cannot pay your bills with gross, :)  Good morning Jay, you are early for a Sunday :) 

I am at it by 5am every morning in summer  6 am in winter.. have to keep up with all my east coast clients..