Canton, OH · Member since 2017 · 59 posts · 6 votes
I look for multi family property with a cap rate of 10% or better. Have not bought a property as of yet though. What is some other good criteria to look for?
Austin, I saw your post and thought I would respond. Its all about the numbers. I am able to obtain properties in my own back yard with minimal repairs at 45 cents on the dollar based on fair market value. You want to look at the condition as well as its location. You do not want to buy into a drug or high crime area.
Austin Jacob wood There's no secret formula, it's all about your personal risk profile, desire for liquidity, if you want to put in sweat equity, etc. Go into a "warzone" and you can get a 10% cap-rate easily, go to the best school district and probably not. Also, just be careful looking at cap-rate, ROI, etc. calculations. Usually, you don't have to skew too hard to make a huge impact. Assuming 5% vacancy instead of 8%, assume 5% for maintenance instead of 10%, ignore cap-ex because a seller told you there is a "new" roof, etc. All of this underscores looking at things deal by deal. Would you prefer a 9.9% cap-rate for a 2015 build or a 10.1% cap-rate for a 1915 build? Now that's one hypothetical I'm 100% confident you won't run into but arbitrary thresholds are always dicey.