What is the average cap rate on a multifamily in Orlando, FL?

Question

Jarrod Benson · Answer

All around Orlando we usually see a cap rate of 8%-12%+. Investors that I work with usually dont touch anything below 10%.

Denny Troncoso · Answer

Hello @Luis Puentes Take into account that the cap rates also vary by the quality of the real estate. Some units that are brand new are selling for 5 caps right now. A property 5-6 cap, B property 7-8 cap, C property 9-10 cap, D property 11-12+ cap. Now that is a rule of thumb as I recently bought a B property at an 11 cap. You can adjust the cap rates not only on the market but with the type and quality of the asset in that market. Send me a PM with what your looking for and I can send some opportunities that come available.

Account Closed · Answer

Cap Rate is really only applicable  to each individual investor. ie I might buy on an 7% cap and you might buy on an 8% cap and we both might have the same return on equity depending on our cost of capital and investment strategy. Consider the following "Band of Investment" approach to Cap Rate development:

debt rate X LTV  =  y

+

equity yield x equity to value = z

Y+Z =cap rate needed to meet investment returns.

Example:        5%loan  X 80%ltv = .04

12%yield x 20% equity = .024

Indicated cap rate = .064 or 6.4%

As you can see, depending on the debt structure we could both by at the same cap rate but that would not mean we would have the same coc return. The range of cap rates indicate the overall value in the market but each investor should determine a Cap Rate applicable to their own situation.

Luis Puentes · Answer

Awesome!! Thanks for the information @Jarrod Benson

Luis Puentes · Answer

Thanks @Jay Dewberry, I will sure do that.

Jay Dewberry · Answer

Perhaps try a local investor friendly agent and/or a local property management company. Other than that, the only thing I can think of is to consult other local investors, REIA meetings, or perhaps contact other multi-family owners. Just thoughts...good luck.

What is the average cap rate on a multifamily in Orlando, FL?

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