What is a good cap rate for multifamily?

properties

As an AI language model, I don't have personal opinions. However, I can give you the information you need.

When it comes to multifamily properties, a good cap rate is typically between 4% to 12%. The cap rate, or capitalization rate, is the ratio of net operating income (NOI) to the property's value. It measures the return on investment for the buyer and is an important metric for evaluating multifamily properties.

A lower cap rate typically indicates that the property is more desirable and has a lower risk, while a higher cap rate suggests that the property is less desirable and entails a higher risk. The cap rate varies depending on the location, property type, age, condition, and other factors.

In general, a cap rate of 4%-6% could be considered for Class A or renovated properties in prime locations, while a cap rate of 7%-9% might be considered for Class B or C properties in secondary locations. A cap rate of 10%-12% could be considered for value-add or distressed properties that require significant improvements or management.

However, it is important to keep in mind that the cap rate is just one of the many factors to consider when evaluating multifamily properties. It should be used in conjunction with other metrics, such as cash flow, market trends, vacancy rates, and growth potential, to make an informed investment decision.