Cap rate in Nashville, TN area for C class buildings, 100 units?

[Todd Moriarty]

Does anybody have info for cap rate in Nashville, TN area (for Columbia, TN) for C class buildings, 22, 72, and 190 units?  Thanks all you cool people on BP.

[Marc C.]

If you're shopping for multis, you should already be friends with all the top brokers in the area, so what are they saying? What does the leading appraiser say? 

Nashville is a "hot" market for multis, I've learned. So expect caps to be attractive to those on the coasts, not to those used to the Midwest. In other words, I wouldn't be shocked to see 6.5-7% caps for C class there. 

I've found that cap rates for listed properties on Loopnet tend to be within about 50 bps (.5%) of what they sell for. Don't be thinking you are going to find a smoking deal that's listed with an agent...it's up to you to find the off-market deals where you can buy at a 7.5 cap or better.

Remember, cap rates are going to rise with interest rates. If interest rates were 5.5 instead of 4.5, cap rates will rise (not by the same amount). So you should be budgeting to sell at a higher cap rate in the future than what you are buying it for now. For example, if I buy at a 7.5% cap, I'm budgeting to sell in 5 years at an 8.5% cap rate (but I don't plan to sell anything...I'm a buyer, not a seller). That will wipe out much of the appreciation caused by "normal" 2-3%/year rent growth, which means don't be counting on appreciation...find the best cash flowing property and hold it until you die.