Good Rent Revenue Multiplier on a 4 Plex

[John B.]

Hi all,

I'm currently evaluating my first fourplex. When determining my purchase price, should I be placing more weight on the cap rate or rent revenue multiplier? If the latter, what would be a good RRM? Below are some bullets on the deal:

Property type -- Four plex (all 2BD/1BA).

Year built: 1915

Location: Kansas City, MO. Midtown/Hyde Park area. Older, dense infill, gentrifying. B/B- location

Avg Unit size -- 850 SF

In place Rent -- $640

Cap Rate: 7.0%

Rent Rev Multiplier: 6.98x

The 7.0% cap rate seems tight, but I don't have a feel for where RRM should be.

Appreciate your input.

Regards,

John