Rental Property Investor · Miami, FL · Member since 2015 · 179 posts · 292 votes
7y
Are you asking about the property’s cap rate or the market cap rate? They are two dofferent things.
The cap rate of the market (or sub-market) is determined by recent sales price of comparable properties and their NOIs. The local brokers are the best source for this info.
The property's cap rate you can simply calculate it if you have the T12 financials. The seller should provide you this information. Divide the T12's NOI by the asking price.
Generally, you will not want to pay a price that results on a lower cap rate than that of the market. (For obvious reasons).
I hope this helps. Feel free to DM me if you’d like to chat further.
Investor · Milton, MA · Member since 2017 · 21 posts · 6 votes
7y
@Lennon Lee
Thank you for answering.
Still looking for the market cap rate. We are working with a broker but he is also engaged by the seller. So not the best situation when you are out of state.
Rental Property Investor · Miami, FL · Member since 2015 · 179 posts · 292 votes
7y
Regardless of who the broker is representing on the transaction he should be able to provide some data on recent sales in the area amd therefore the market cap rate for the asset class you are looking at.
But I understand the challenge of being out of state.
Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes
7y
@Edwine Alphonse I am not aware of a market cap rate for the whole city of Jax. You can look on the MLS and see Retail MF with cap rates of 4-5%, but every area of town is going to be a bit different. In Class C/D areas the cap rates may be higher, but the property values lower, rents still strong with HUD tenants.
You need to find your own representative, not someone representing both sides in a transaction, that only benefits one person, and its neither the owner or seller.
North of Houston · Member since 2018 · 349 posts · 181 votes
7y
@Edwine Alphonse the project is small and if your small too, go with a small bank, that's why they are there. A bank that is as local to the subject property as possible. I myself seem to have real good luck with banks that have no more than a half dozen branches.
Cap rate? you need to know all the real expenses and actual money that came in, the real expenses and deposits are on the owners tax return. If there is a privacy issue, ask to see only the schedule for that specific property if this is a serous transaction going forward.
North of Houston · Member since 2018 · 349 posts · 181 votes
7y
I am in Texas, I rarely do deals I can't keep my eyes on every other day so. I don't know about your market or its banks. I just know about banking culture. Most my loans are new construction and to perm so its even harder for me being such a small operator with a small team asking for the hardest loans to get.
I would just use google maps to look with in a few miles of the subject property. Next go to their website then from there search for locations. Usually at the top of all their front pages you should see a link(sometimes at the bottom) , if you see over 6 locations, I would just keep moving to the next bank or credit union. I know a lot of people reading this think its crazy but it is what works for me. Being that you are buying something leased and ready, its might be a lot easier for you. Still the local banker doing those kinds of loans might clue you in with zero self serving information about the market, its worth the exercise