Conroe TX Cap Rates?

11 Replies

Anybody have an idea what the cap rate is for small multifamily properties in the Conroe, TX market? I've got a lead on an off-market deal that I'm trying to underwrite. Thanks in advance for your help.

@Andrew Taylor I’ve been looking for awhile and can’t find much good information lol. I would love to know too!

You can reach out to a local broker to get an idea. Or you can pull up the Marcus & Millichap reports and find the cap rates for the corresponding class properties in Houston and add about 25 to 50 basis points.

@Andrew Taylor @Daniel J. , any luck in the last month or so on your search for prevailing cap rates in Conroe?  This will be of limited help, I realize, but from a quick search on a Sunday night (when calling local brokers isn't an option), the best I could find so far is a live listing with a calculated cap rate of 7.15% 

http://www.loopnet.com/Listing/1910-Willowbend-St-...

Would certainly be curious to hear what you ended up coming up with in your research...

Don't read into the propaganda of Conroe being the fastest growing City in the US. Conroe is not that great of an area. Some growth is in the new master planned communities but the Conroe City area is pretty.....ehhh... Not spectacular. I wouldn't touch anything with a 7 cap unless it was near the woodlands. Taxes are high around here too so watch out. Good luck. 

I ended up subscribing to nationalcaprates.com. They had the Houston area at something like 8.98. Based on @Michael Le's comment above, I used 9.25-9.50 to value the property I was looking at.

No idea how they come up with their numbers, Mitchell. I just selected something like Class C suburban multifamily in the Houston market and it showed 8.98 as the rate. Based on the suggestion from Michael above I added 25-50 basis points and used that for my calculations.

I think an 8.98 CAP rate in Houston is fantasy. My experience is that you'll get a 4-5 CAP rate in hot areas like Montrose and Midtown. In middle-of-the-road areas, you're looking at 5s to upper 6s.

You can get 8+ CAP rates in lower end areas. 

Hi Andrew, I’m curious which property you’re looking at in Conroe. I’ve lived in the area about 3 years and I’ve taken most of the smaller apartment owners to lunch to try and hear their experiences and how they got into the business. Actually, the MF buildings I’ve seen for sale recently have been at 8% or above, but that may be a fluke—and we are talking 8 and 10 unit buildings for what that’s worth.

If you are still looking in the area, I’ve been working on 3 owners that seem like they’d be interested in selling, I just don’t have the capital to make an offer they wouldn’t laugh at. I’d love to help make a deal happen if I can learn a bit in the process.

Cheers!

@Clifton Barker

I sent you a pm as I am looking for properties in Conroe as well.

How did you get in contact with all these owners?

Thanks,

Daniel 

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