Long Term Rental Cap Rates

[Michael Olmstead]

I have been calculating cap rates for long term investors and comparing the info provided in MLS listings vs what seems to be the cap rate avg in North Texas. Does anyone have a realistic cap rate number for long term rentals in DFW? Over 10% seems unlikely, but that is of course always the goal. Curious for local agent's feedback, thanks!

[Scott E.]

Quote from @Ali Nichols:

Hey Michael! For what it is worth I heard through a contact that the big institutional buyers (i.e. invitation homes, progress, etc.) have been targeting 5.2% cap rates on new acquisitions. This is just a pov for residential SFR homes. Not sure on Multi-fam.

If this is true, that explains why it's impossible for retail investors to find deals in this market. You can't buy a house with any leverage right now and cash flow if you're buying at a 5.2% cap but borrowing at 7.5%+. 

Even if you put 50% down you're still going to just break even every month.