Considering buying multifamily with 7.05% cap rate. Advice pleas

[Beny Bini]

This is my first post on Bigger Pockets, so I am excited. I am considering buying a 12 units, all 2-1 for $725k in the Houston area. the current monthly rent is $7925.  The current rent is lower than the market, which means it has a potential to increase the rent to $9000.  I am wondering if 7.05% cap rate is too low.  Thank you for your help.

Ben

[Cody L.]

Originally posted by @Beny Bini:

This is my first post on Bigger Pockets, so I am excited. I am considering buying a 12 units, all 2-1 for $725k in the Houston area. the current monthly rent is $7925.  The current rent is lower than the market, which means it has a potential to increase the rent to $9000.  I am wondering if 7.05% cap rate is too low.  Thank you for your help.

Ben

Is this Hoffman?

CAP is pretty pointless in class C. It's based on NOI. But WHOS NOI? Yours or theirs?

Do they have a property management expenses or do they do it themselves so put $0?  Is gross income just based on full rent roll * 12 or are they looking at their actual $ they brought in.  Do they have insurance or do they self insure since they own cash?

Are you paying way more per door than others that sold in the area? If so, congrats on your 7 CAP that you can never sell.

Also, a TRUE 7 CAP is *awesome* in Montrose. But crap in 5th ward. So basically saying "is this 7 CAP a good deal" is like saying "There is a car for sale for $10k. Is that a good deal?" WHo knows. Need more info.