Cap Rate - Posted by Tommy_FL

Posted by Tommy_FL on February 01, 2000 at 16:57:22:

Thanks Ed for enlightening me. I always read your posts and appreciate your generosity.

Cap Rate - Posted by Tommy_FL

Posted by Tommy_FL on February 01, 2000 at 13:37:10:

Since I bought CS Course at the end of 1998, I have been fairly lucky so far. I have purchased my first home that had given me an instant equity of 20K (very motivated seller in nice neighborhood) and 9 months later a foreclosed condo that have provided me a monthly positive cash flow of $150.00 and an instant equity of about 13K. All purchases were with very little money down. I am starting now to look at multi-units not more that Fourplex. My question is: should I always look at a Cap rate of 12%. I have looked at 4 or 5 properties (triplex and fourplex) in bread and butter neighborhood, all fully rented, decent rents between $695 to $850 depending 1/1, 2/1 or 2/2…Minimal rehab and ASKING prices reflect the market, very seller’s market in Fort Lauderdale or Pompano Beach between 150K to $179K. So they are not exactly at 12% Cap Rate. Any comments please. Thank you. I do not intent to go into lower end neighborhood, war zone…etc. Thanks again.

Re: Cap Rate - Posted by Ed Garcia

Posted by Ed Garcia on February 01, 2000 at 16:28:17:


I’m sorry to disappoint you, but 1 to 4 units are not considered multiple units
in this business. Five units or more are considered multiple units.

When dealing in 1 to 4 units, I wouldn’t use a cap rate. Instead I would go
by gross rent multiplier, with that size of a deal.

Ed Garcia

Gross Rent Multiplier - Posted by NB(ID)

Posted by NB(ID) on February 02, 2000 at 09:49:01:

I’m currently looking at a 3 unit property. The cap rate figures about 16%, but since you suggest not using that how do you figure the gross rent multiplier?

Many thanks