Buying 8% cap deals

Rental Property Investor · Chicago IL · Member since 2013 · 25 posts · 39 votes

If I wanted to buy long-term buy and hold rental properties, small or medium multifamily with 8% cap rates around Dallas, Austin, Charleston, Cincinnati, etc is that possible and how would you recommend sourcing those deals?

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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 965 posts · 637 votes
8h
Hi @Laurence J. Be careful focusing only on an 8% cap rate. From my experience, the highest cap rate isn’t always the best deal.
For long term holds, start with the fundamentals: job growth, population trends, landlord laws, neighborhood demand, and the operator or management team. Talk to brokers who specialize in multifamily, and operators already active in those markets.
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- Laurence J.Pro Member
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  Rental Property Investor · Chicago IL · Member since 2013 · 25 posts · 39 votes
  7h
  @Denise Supplee thanks! Do you recommend starting with the broker then and asking them to source the deals? All my current properties are in Chicago but I’m looking to diversify out of state.
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G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 842 votes
7h
It’s possible, but I wouldn’t get too focused on finding an exact 8% cap rate. I’d first figure out what kind of risk you’re taking to get that return. Sometimes a higher cap rate is there because there’s a real opportunity to improve the property, and sometimes it’s there because there are problems.
I’d spend time building relationships with brokers who work with investors in those markets, property managers, and other owners. A lot of good deals never make it to the big listing sites.
The best deals usually come from relationships. The more people who know what you’re looking for, the more likely you are to hear about something before everyone else does
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