I'm curious as to why in the same town, $150k 2-4 unit multifamily homes have cap rates of 20%, but 20+ unit apartment complexes for $2 Million have cap rates of 6%. What's the advantage of spending such a large amount upfront to get such a pitiful return? The appeal of commercial real estate just doesn't make sense to me? It's harder to get into, more expensive, harder to place tenants, and generates a fraction of the return.
Based on Connecticut Real Estate market.
EDIT: For those saying 20\% Cap is unrealistic...
I own several properties making ~20% Caps in the area right now. One is a duplex I bought Jan 2017 for $49k and put in $26k of remodels over 45 days of work singlehandedly. It currently produces $2695/mo with below market rents (should be $2900/mo). Taxes are $350/mo, Sewer/Water $75, and Landscaping is $70. I had both units rented during the demolition process of the remodels, way before it was completed. I value it at $140k. Anyone who wants to buy this property for $441,000 at 6% Cap.. I'll give a $41,000 discount to. LOL
Submitted July 04, 2018 at 11:00PM by ThePermafrost https://ift.tt/2u0kWfk
