South West Florida Cap Rate

[Kamil Maras]

I received some advise from my banker today.  I though I'll share it here and maybe get some feedback.  I have asked him what cap rate to use when putting offers in on 5+ units multifamily in the Cape Coral, Fort Myers area of Florida.  This question was in relation to the Banks ability to finance those purchases.  This is a part of his answer.

"I think conservatively 10% is a good cap rate to use. It is conservative, but a catch all analysis if the market takes a down turn again. I think you realistically need to shock (reduce your total gross rental income) by 5%, 10%, and 20% to see if it will cash flow on the down side. Then, I would make offers based on the median of this analysis."