All Forum Posts by: Nick Brown

@Immanuel Sibero Thank you, I just sent him an email asking his thoughts on the current prevailing market cap. It did seem extremely arbitrary for him to include the cap rates which don't really mean anything.

@Julia Bykhovskaia Totally agreed, not sure what the point of even including those caps are. It's a C class property in a C class neighborhood, 17 units. The 62.5% occupancy is the current occupancy. 

@Bjorn Ahlblad Thanks, I'm just doing a surface level valuation and haven't dug into the nitty gritty. I'll definitely be asking more than 1 broker for the area cap rates, thank you!

Hey!

I'm trying to underwrite some properties and a broker often sends info like this:

Currently 65% Occupied. The Projected Net Annual Operating Income at 100% Occupancy with units leased at market rates is $109,500 or a 17.5% Capitalization rate at the asking price of $626,000. The 2019 Projected Net Annual Income based on 62.5% occupancy is projected to be $35,896 or a 5.73% Cap Rate.

Is he trying to say the cap rates for comparable properties are 5.73% or 17.5%? What would I use to underwrite the sale of this once stabilized? I'm assuming the stabilized cap rate is somewhere in between there?

Thanks for any help!

@Justin Kane What other sources are you using to underwrite?

Definitely conventional loan. Conventional loans offer great rates for smaller properties, As a business owner, they'll probably look at your last 2 years income and average it.