Buying my first property (NEED ADVICE)

[Lorenzo Lopez]

Hello all,

I am trying to do my first deal/buy my first MF property but I haven't been able to move the needle.

I am focusing on Small MF (2-4 units), with a value-add strategy. I have been cold calling direct-to-seller and working with brokers to find deals.

I don't understand how properties, in East Boston, for example, are trading at around 5.3 cap when rates are around 6.5%. I was cold calling an off market property and the guy laughed at me because I asked if he would take somewhere around an 8 cap (obviously i didnt say this, I gave him a ballpark number) and he shared with me that these properties are trading at 5.3 cap. I just dont understand how people are buying at such low caps ? Aren't they losing money? Can someone please explain how transactions are being made? (other than the seller financing stuff because I've asked and nobody seems to be interested)