ARV's in KCMO for MF

[Travis Limbocker]

BP Nation,

Was hoping to get y'alls input on a project we're considering in the Kansas City, MO, particularly around After Repair Value (ARV). To provide a bit of context, we're value add, buy and hold investors with a focus on BRRRR as our primary strategy. Here's the details:

• -MF in North Kansas City - C Class Property - B Neighborhood
  
• -Purchase price $640k
• -Rehab $85k
• -Total project cost $725k
• -Pro forma gross rents $9,500mth / $114,000yr
• -Addtl Income $600mth / $7,200yr
• -Expense Multiple ~40-45%

Based on the above figures, we're projecting NOI to be anywhere from $70-75k. We've bought and sold a number of MF's in KCMO (Raytown area) in the past few years and the cap rates upon selling we're between 8-9% (1yr ago). In looking around and reading the forums, it seems cap rates are still compressing a bit around greater KCMO. For the above project, we're anticipating ARV to be between $850-$950k and frankly, the deal wouldn't really fit our investor's needs or our model if not.

Any thoughts here? Am I crazy to project an ARV in that range using a 8-9% cap range?

[Travis Limbocker]

Thanks @Michelle Lutz and @Logan Freeman. We did some further due diligence on the rehab and did uncover some higher ticket items. Adjusted the LTC and ARV numbers as needed. Didn't pencil out for our model. Appreciate you weighing in here.