What is the cap rate for commercial Multifamily in Houston?

[Alex Ramirez]

PLEASE HELP.....Hi everyone, I hope you can help me. I have a lead for a small apartment building. The seller is motivated. After running the analysis the purchase cap rate is 7.8%. My question is, what’s a good cap rate investors buy in Houston? In case I want to wholesale it, is 6.75-7% still good? I will really appreciate your help

[Brian Burke]

This is kind of like asking "how much should I pay for a 3 bedroom, 2 bathroom 1,500 square foot house in Houston?"

The answer is, "it depends."  In one neighborhood the price would be higher or lower than in a different neighborhood.  So it goes with cap rate.  Some neighborhoods will trade at a higher or lower cap rate than others.  Older properties would likely trade at a higher cap rate than similarly located newer properties.  Value-add deals will trade at a lower cap rate than stabilized properties.  And so on.

This is only one of the reasons why cap rate doesn't matter.  Pay the price that delivers the investment returns you are seeking.