All Forum Posts by: Shane Crockett

I’m getting into MF investing and wanted to obtain feedback in regards to cap rates, specifically on how to improve (lower) them from the time you buy to the time you sell a property.

My fear is that if I purchase a B/C grade asset and put money into it for value add, but can only find buyers willing to negotiate a cap rate that kills all my equity, I’ve basically wasted a lot of time, energy, and money just to break even or perhaps worse.

What are the keys to avoid this from happening, and how should I be looking for the right properties to purchase so I don’t end up in this situation?

@Greg Dickerson thank you for that feedback, much appreciated. The deal definitely works purely from a numbers perspective, but having never subdivided land I feel my formula could be missing certain metrics associated with the subdivision process.

Looking at land in Washington that is 2x more than I originally budgeted for and thus would require additional capital/investors, but could also mean opportunity to subdivide and build 4-5x the number of homes originally planned. The math certainly works out but it doesn’t include the elevated risks, subdivision process , etc, so I’m wondering if any experienced developers or investors have feedback or guidance they’d be willing to share.