Cap Rates of multifamily in Akron OH

[Joe Ebanks]

I am looking at some multifamily here and would really like to see what these things are actually selling at. I cant find this information anywhere. I have seen some comps in offering memorandums but they do not include the actual figures. Usually just price/unit. I would like to look at all the recent sales and analyze the cap rates and other figures so I know what the market is paying currently. 

Can anyone help? thanks!

[Don Young]

Hi @Joe Ebanks, I am sorry that I cannot help with your question, but I am also interested in this information for Akron, OH and surrounding areas like Cuyahoga Falls and Stow. I would maybe try and find a real estate agent in the area that is familiar with working with investors if this thread doesn't pan out. I am not sure of the best way to find investor-friendly agents in a given area aside from posting here or just calling a bunch.

@Ryan Arth, do you have any idea on this? I cannot remember if you mentioned having any multifamily properties or if your properties are all SFHs...

[Account Closed]

The problem is not just finding the sales price, it is almost impossible to find out actual NOIs.

 Cap Rates are individual to each buyer, each buyer makes different assumptions and so if you ask the buyer and seller what the cap rate was, you would get 2 different answers.  When all investors strategies are accumulated, then you have what is called a "market Cap" which reflects the overall sense in the market. I will caution you in that many of the Cap rate that you see published reflect investment grade properties (ie institutional buyers) so that for smaller properties the "delta" is very wide.

My suggestion to you is that you develop your own cap rate requirement (equity vs debt - see band of investment analysis) and then apply that to each prospective investment. Those that meet your criteria, you can explore more, those that do not, you can discard. Simple but effective. If you find that you are not getting any deals, then your model may need refinement.

[Matthew King]

@Joe Ebanks Sorry Joe, no database I am aware of with NOI, Caps, Occupancy, property conditions, etc. at the time of sale. My only source for this information would be a good appraisal firm in the area and they generally want payment in the form of an appraisal to disclose what research they have come up with or a Multifamily broker. Good Luck!

[Mike Dymski]

Local MF brokers will have comps and a cap rate range by class for the market.  You will have to independently verify this with your own research and underwriting.  If you are able to find properties with value add opportunities, you can mitigate the risk of not knowing the market with the same level of precision as the experts.

[Joe Ebanks]

Thanks guys for the responses, I appreciate it!
That is a great idea Don and I will try and do that. Lets compare data that we come across :) I also like the Falls, Stow area..

@Nicolas Paez, Thanks for the advice! I'm going to study up on this, never heard of it before, and try to develop a good criteria. Great explanation!

@Mathew King, I think this would definitely be worth paying for and I will go ahead and look into it. Thanks for the tip. I just got an email about a building you recently sold in the area. Keep it up. Hopefully one day I can buy a property through you!

Pretty sure I dont know how to do the @name properly still..

[Don Young]

@Joe Ebanks, I have problems with the @names sometimes too. It seems that you can't go back and enter these into text you have already written. I'd love to compare our findings.

[Mark Kuster]

You can access sales comps, cap rates, etc through a costar membership. It's pretty expensive though. You can also order a report from Reis that will provide you with everything that you asked about. I's also pretty expensive but if you ask them for a demo you can have them demo your area of interest, you will get all the info but you won't be able to save or keep it. I hope this helps

[Brent Coombs]

Why not just use the price/units ratios that you DO have access to? Make sure your numbers work for YOU, even allowing for zero appreciation over time. 

It's largely a best-guess game anyway...

[Joe Ebanks]

@Mark Kuster Thanks Mark, Going to do that... 

@Brent Coombs Assume you just mean the comps the broker provided me?  Perhaps this is the way to go. I really need to find some more though. I also think that zero appreciation or possibly even small depreciation is quite likely in some areas of Akron.. But who knows. One unit I just looked at is basically a section 8 neighborhood. I would strongly doubt that its going to appreciate. Also dont think you can add value to it or raise the rents. So there is really no room to get the price wrong. It looks like it would cash flow well, but this is a rather difficult property to start with. Not very interested unless I can get a great price... and even then... a lot to think about.

[Brent Coombs]

Yeah, SOLD comps. Do they seem too disparate? Well, that could be in your favor! You can put in lowball Offer/s because no-one could prove it should be worth more! 

Your excuse: For good reasons, multi-plexes are ALWAYS valued less per door than SFR's.

And yes, neighborHOODs are a lot to think about...