Questions about cap rate

[Perla Leon]

Hello everyone. I am new here. I am interested in investing on a multi-family property to rent it out. I was interested on a 5 unit 2 buildings in Palmdale California for $600K collecting $4200 monthly but I am not sure if this will be a good deal. Should I be inquiring about the cap rate?

[Gabriel Amedee]

Don't inquire about the cap, you will be told some magical number that you want to hear.

Ask for documents. Rent roll and bank statements. Then calculate cap on your own. If they don't want to give out that information without a form of action (offer or under contract) then attempt using round estimates. 10% capes, 5% vacancy. Find out taxes on the county site. Check out rental rates in the area similar to that of the subject units so you can form a better estimate of what this property would produce. Will you be paying cash? If not then I would gear yourself more towards cash on cash return (COC) and consult with a lender about your financing options for this property.

Any other questions feel free to reach out !