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?