I ended up subscribing to nationalcaprates.com. They had the Houston area at something like 8.98. Based on @Michael Le's comment above, I used 9.25-9.50 to value the property I was looking at.

Account Closed I sent you a pm as I am looking for properties in Conroe as well. How did you get in contact with all these owners? Thanks, Daniel

I clicked on this property link in Conroe Texas and got a call from the realitor that is representing the builder. He did his job by painting a picture like Conroe was the next San Francisco and how fast the area was growing. Well I didn’t bite on his sale antics because I just have a hard time with the 6.5% cap rate on a pro-forma. The property isn’t even built or rented out yet. Let me know your thoughts 202 Oakcrest Rd Conroe, TX 77304 http://www.loopnet.com/Listing/14728488

Thanks for the feedback, @Mike Landry, @Andrew Taylor and @Fred Heller! Really appreciate having some more local input.

I think an 8.98 CAP rate in Houston is fantasy. My experience is that you'll get a 4-5 CAP rate in hot areas like Montrose and Midtown. In middle-of-the-road areas, you're looking at 5s to upper 6s. You can get 8+ CAP rates in lower end areas.

No idea how they come up with their numbers, Mitchell. I just selected something like Class C suburban multifamily in the Houston market and it showed 8.98 as the rate. Based on the suggestion from Michael above I added 25-50 basis points and used that for my calculations.

@Andrew Taylor Can you share some of the info from Nationalcaprates? What makes the rates around 9.5%?

Don't read into the propaganda of Conroe being the fastest growing City in the US. Conroe is not that great of an area. Some growth is in the new master planned communities but the Conroe City area is pretty.....ehhh... Not spectacular. I wouldn't touch anything with a 7 cap unless it was near the woodlands. Taxes are high around here too so watch out. Good luck.

@Andrew Taylor @Daniel J., any luck in the last month or so on your search for prevailing cap rates in Conroe? This will be of limited help, I realize, but from a quick search on a Sunday night (when calling local brokers isn't an option), the best I could find so far is a live listing with a calculated cap rate of 7.15% http://www.loopnet.com/Listing/1910-Willowbend-St-... Would certainly be curious to hear what you ended up coming up with in your research...

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Updated almost 6 years ago on 03/27/2019. Most recent reply

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Andrew TaylorPoster

Contractor
Magnolia, TX

Local Real Estate Networking

Conroe TX Cap Rates?

Andrew TaylorPoster

Contractor
Magnolia, TX

Posted January 31, 2018 06:36

Anybody have an idea what the cap rate is for small multifamily properties in the Conroe, TX market? I've got a lead on an off-market deal that I'm trying to underwrite. Thanks in advance for your help.

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