Where Would You Invest One Million Plus in A+/A Class Properties

[Kevin Yi]

Looking to get around 6%+ cap in A+/A class properties. What type of property and where would you invest one million plus?

[Brian Burke]

@Kevin Yi, according to the CBRE cap rate study for the first half of 2017, the only markets with a market cap over 6% in the class A multifamily space are Cleveland (6.25%), suburban Columbus (6.25%), Detroit (7.5%), Memphis (6%), Oklahoma City (6.25%), Pittsburg (6.5%), Richmond VA (6.25%), and Stamford NY (6.25%). The cap rates in the study always range, and the swing is 0.5% to 1% and the rates in parenthesis are the top side of the range, so many class A properties will be trading under the rates you see here. The study only reports infill and suburban Tier I, II and III cities. Secondary and tertiary markets are not reported so I'd guess there are plenty of those markets where 6 caps could be found in class A.

There have been a number of responses in this thread that incorrectly reference a 6% return.  These responses are confusing the question in the OP, which was asking about markets where a 6%+ cap rate could be found.  A 6% cap rate does not mean a 6% return (no, even if you are paying cash, it still doesn't--but that's a whole separate post).

So the question is why do you care about the cap rate?  Seems to me that what matters most is return...investing is a venture intended to place dollars with the expectation of getting more dollars back later, with the winner being the investment that gives you the most dollars back considering the amount of risk you have to take for it all to happen.  Cap rate is nothing more than a yardstick designed to measure the prices folks are willing to pay in a given market for the purpose of comparing one property to another.  That's all it's good for.