Seattle Cap Rate Map

12 Replies

Does anyone have a general cap rate map for the Puget Sound area?  I know a lot goes into cap rates and it can vary within each geography but I am curious if there is such a thing out there?

Paul

We can put one together!!  Could be an overlay on top of a Google map.

Generally speaking, the closer you are to Seattle / Bellevue , the lower the cap rates will be, and the further you go away from these centers, you would find higher cap rates. 

But the even more fascinating thing would be to identify outliers from the map, where some particular pockets have higher/lower cap rates than comps around it.

Originally posted by @Alex Chin :

@Adrian Chu -  I would be curious to know where you usually get your cap rate comps from? I've used Loopnet and simple napkin calculations for small-multis, are you getting better numbers from another site?

Commercial Broker Association and NWMLS should have sufficient data.

We would also need to take into account different property types, and date of transaction.. but I imagine there should be enough data points.

It would be more challenging for residential properties.. if one wants to take it a step further, one can map recent residential sales history to recent rental rate if the transaction is documented on the MLS.

Or even compare zestimate sale price vs zestimate rent price, despite how inaccurate that may be.. would still be an interesting exercise.

Any local BPers interested in working on this endeavor? :)

@Adrian Chu Hmmm...companies like Redfin, Zillow, etc. are valued pretty highly for their ability to provide high-level real estate pricing estimates.

Have to wonder if a company that could do something similar for cap rates would be worth a nice piece of change. Seattle is certainly the right town to try getting something like this kicked off in!

@Adrian Chu I like this idea.  Just pulling zestimates and rent zestimates and making some assumptions of expense costs you could come up with a reasonable ball park cap rate.  This would only be for singlefamily.  I wonder how you could do this for MF easily? 

A cool map that could pan around with darker colors for lower cap rates would be interesting.

Originally posted by @Paul Weller :

@Adrian Chu I like this idea.  Just pulling zestimates and rent zestimates and making some assumptions of expense costs you could come up with a reasonable ball park cap rate.  This would only be for singlefamily.  I wonder how you could do this for MF easily? 

A cool map that could pan around with darker colors for lower cap rates would be interesting.

For MF, we would use recent transaction data from the NWMLS and CBA. Same for commercial and industrial. 

Originally posted by @Adrian Chu :
Originally posted by @Paul Weller:

@Adrian Chu I like this idea.  Just pulling zestimates and rent zestimates and making some assumptions of expense costs you could come up with a reasonable ball park cap rate.  This would only be for singlefamily.  I wonder how you could do this for MF easily? 

A cool map that could pan around with darker colors for lower cap rates would be interesting.

For MF, we would use recent transaction data from the NWMLS and CBA. Same for commercial and industrial. 

 I can help with the multi-family portion for CBA sales comparable; however, we will need to rely on advertised cap rates as it would take a long time to underwrite and verify all of the cap rates. 

Propertyradar.com has a function that should work. it's not a "map" necessarily and like Zillow, Trulia, etc., and even the MLS to a certain degree, not entirely realistic.

For instance, the data on the MLS is ONLY as good as the listing broker's inputs. so if they are off, so will be the numbers.

i recently saw a listing boasting a 26% cap rate.  upon a quick calculation i determine this mensa candidate misplaced a decimal point. the real cap rate was more like 2.6% vs. 26%.  

Talking a decent Commercial Broker will put you in the zone, I usually ask by zipcodes, and when I get confirmed reports from multiple brokers I know I am close.  You can also ask for recently solds in the area and comps to get the prevailing cap rate.  It would be cool to have, I know a pretty good developer who has worked for some of the local area real estate .com companies, I'll poke his brain at it.

small commercial & multi-use properties are in the 2.9 -5.5 range. One 3 unit one story next to mine in West Seattle just sold with a 5.2 CAP and it is pretty much a knock down. But he was sick, needed the $$ & sold quick.

JQ

A GRM map would be far easier to pull off as you don't have to factor in expenses. It would still serve the purposes and be much easier to gather using publicly available data like zillow. I'd be curious to see how big a difference really exists between West Seattle and further south like Burien

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