Current cap rates for multifamily value-add

[Michael Janas]

Hey everyone. I'm underwriting a potential deal on a 6 unit residential with a commercial unit on the bottom the floor. NOI is reported at 61k based on pro forma which I think after true expenses are accounted for is closer to 56-57k. Seller is valuing the property at a 7 cap off the 61k NOI. Wanted to know if this is a reasonable cap rate? My gut says that it's overvalued and that I should be offering more around a 8 or 9 cap based on the risk profile of the investment. This property is located in south New Jersey. Any input regarding what you are seeing from a cap rate valuation standpoint right now would be appreciated.