*This link comes directly from our calculators, based on information input by the member who posted.
For the area 8-10 cap would be a safe bet. I am pretty sure I know which one you are referring to. One concern would be how small the 1 bed units are. I do think $700 for market rent is conservative.
@Scott Goulet Thanks for starting this discussion. I'm anxious to see other responses because I am looking at a smaller multi-family deal (in a small town just East of KC). I am getting a Cap rate closer to 7. Full disclosure, this is my first time really digging into a multi-family deal, so I'm not confident in my analysis at this point. I don't know if the ARV should drive the cap rate, or if the cap rate should drive the ARV. I should clarify that the one I am looking at doesn't have much room to support adding equity through rehab. I'm using the list price as the ARV for now.
*This link comes directly from our calculators, based on information input by the member who posted.
For the area 8-10 cap would be a safe bet. I am pretty sure I know which one you are referring to. One concern would be how small the 1 bed units are. I do think $700 for market rent is conservative.
Having rents at $700 as you run numbers is a smart move. For me, the main concern with the building is the 1 bed and 1 bath at 450 sqft. I'd imagine there'd be quite a bit of turnover. Now there are areas in the city that'd be super popular; however, I'm not confident this is the property right now. But you may be comfortable with that. A previous listing for the property mentioned a coin operated laundry. Are there any other revenue streams for the property (laundry, parking, etc.). Another thing I'm curious about is the seller's motivation and how they landed on that list price--but, again, that's just me.
Will defer to others with more knowledge of local area, but 450 sqft rental spaces screams transient income renters to me, which is exactly what you don’t want to be dealing with when trying to establish consistent, reliable cash flow.
I do agree that you may tend to get a more transient tenant at that price, but you could also offer them to Section 8 tenants if needed, and would be guaranteed the money. Just a thought.