What are the 2018 markets for better CAP rate ?

Question

Hi

Any suggestions on markets/metro areas where I can get a 9%+ CAP rate with an investment of around $2M or less?

I am looking to invest in Commercial real estate

Zach Quick · Answer

Where is old Bob Bowling when we need him? lol

Gino Barbaro · Answer

@Michael Swan

Hey Michael

I would definitely be investing in Cleveland if it was in my backyard.  The city and county have funky laws, and you need to know the market. The west side looks newer than the east, but the per door cost of the east is attractive.

Hope you continue to buy

Gino

Michael Swan · Answer

I also have the same thought as @Gino Barbaro,

I do invest in suburbs of Cleveland and Akron and have 5 apartment complexes currently.  However, most of the time these cap rates are not true and you need to be very careful to vet your team that really knows the true cap rates.  I have found that many brokers send deals to people in areas that have much lower cap rates, deals that I would not touch with a 10 foot pole.  I see graffiti, broken and boarded up window, a tavern across the street and are hocking true D class deals and disguising them as C class deal.  Once you buy a place like that the BLANK hits the fan and you vastly overpaid for your property and you deal with the money pit for a few years and go through 2-3 Property managers and get sick and tired of excuses and making the PM money, while you continue to take out of pocket.

Then, you just want to get out and move on to greener pastures.  Take my advice I lived it and have come out on the other side and have $160,000 cash flow and am soooooooo excited to get my next deal.  I just put and offer on 3 apartment complexes where I already have 48 front doors in that community and don't leave much to chance any longer.

Swanny

Gino Barbaro · Answer

@Ranjith Marappan

Hi Ranjith

Why are you focusing on only markets with a 9+ cap rate?

Gino

Russell Brazil · Answer

You wouldnt even get a 9%+ cap in a war zone here.  4% range in A areas, 7% in C areas.

Brian Wilson · Answer

Kc is a great market to invest in. But i would have to reiterate what previous investors have said concerning investing where you know. Kc is rapidly growing and building apartment complexes all over the place, and investing in apartments without having intimate knowledge of the Kc market right now would likely set you up for failure.

I know VA can be a very expensive market. But there are very good deals in the DMV area if you know what to look for. I don't know if he handles any commercial real estate, but as an agent and investor in the DMV I'm sure @Russell Brazil could point you in the right direction. And at the very least help you avoid any war zones.

Best of luck!

Ranjith Marappan · Answer

Because that seems to be  what others recommend

Anthony Dooley · Answer

@Ranjith Marappan a smaller cap rate area historically will appreciate better and a bigger cap rate property historically will cash flow better. You usually will not get both. I recommend  you look in markets/metro areas that YOU KNOW very well. Buying in Memphis when you live in VA is a perfect way to lose your money.

Antoine Martel · Answer

Have you thought about investing in Memphis, St. Louis and Cleveland?

I invest in these areas and 9% cap is easy to find here.

Andrey Y. · Answer

Banned from this website. Luckily, I have a few meals/drinks with him every year in real life! :P

What are the 2018 markets for better CAP rate ?

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