Multi-family cap rates in Davidson Country (and Middle TN)

[Ryan Lewis]

Hi BP community - I'm currently working on acquiring my first multifamily property and recently started analyzing deals.

Being new to multi-family, I'm paying closer attention to cap rates than with my previous single family properties. What are ya'll finding in Davidson (and surrounding) counties as a "good" cap rate for multi-family properties in class B and C neighborhoods? Just curious as I work to better define my buying criteria.

Thanks!

[Crystal H.]

Hi @Ryan Lewis - I'm also in Nashville and just purchased a duplex. Take with a grain of salt, because we are new to this! :)  

I didn't see a whole lot in Nashville (Davidson) that was above 5%, which is about what ours is coming out to. I have read most people look for 8-12%. We decided we were OK with 5% for a number of reasons: 

- Great renters already in place
- Home was already partially remodeled (but still room for us to improve and raise rent moving forward) - we have 2 small kids and aren't looking for a huge project right off the bat
- Good location for appreciation (37216/Inglewood - it appraised for $17k more than we paid)
- We analyzed a bunch of deals and didn't want to wait any longer to get in
- Lastly, we were funding this using tech stock from my day job, so moving from a highly volatile investment (could go up 10x or drop by 50% at any point!) to something more stable and this fit the bill for us

Here is a link to the rental report we built on BP: https://www.biggerpockets.com/...

Hope this helps!