Kansas City Cap Rates - Multifamily

[Shane O'Donnell]

Hello Fellow BP'ers,

I'm in the process of exploring the KC area (downtown and surrounding areas) to purchase small to mid size multi family properties. Size range, depending on pricing, will be 8-20 units. I need some help with what current cap rates are for the areas. Also, if you have feedback on local market conditions I'd welcome that too.  Thank you! Shane

[Lee Ripma]

It depends on the area but cap rates are fairly compressed in KC right now. For desirable areas you're looking at valuations based on a 6-7.5 cap. Even a larger C class property I was looking at in Belton was listed around a 7 cap. The thing that kills me on a lot of those LoopNet deals is that they are trying to sell them on an 8 cap based on proforma numbers (after upgrades!). That won't allow you to capture the upside. I live in LA and invest in KC. I'm just finishing up a 6 unit project and am also searching for a small apartment (6-20 units).