Multifamily master meter

[Account Closed]

A friend sent me a 72 unit that's available for 4.2m. A 7.56 cap rate. $318,957.97 NOI according to the trailing 12. I asked for someone to JV with me & sent the email to an investor. They are processing the purchase. He wants me to bring something to the table, and since I am living on a VA check and have no money, I reached out to another investor. He'd like to help, but is concerned about the master metering on the utilities. He said it's hard to figure the true cap rate. Is it cost effective to replace and set up individual meters? The returns would be better. How could I estimate?

[Michael Le]

I'm not exactly sure what the connection is between master metering and with the cap rate. Unless they mean that they are not sure about the exact expenses for the property. But you can get look at the historical utility costs to get a good idea of that. It is generally not cost effective to setup individual meters. Most of the time setting up RUBS is the best way to get that cost passed along but you have to make sure the market will support that.