Market Cap Rate

[Mitchell Ferraro]

Good Afternoon! Does anyone know what the market cap rate is going for in the area of Milwaukee, Racine, or Kenosha, WI? Or in another words, what cap rate are other investors looking for in these areas? Thanks! Mitch

[Brett Britten]

Mitchell - It's been a bit of a moving target for me in Racine. I feel like the market is still well below where it was in 2007 and cap rates on my properties vary pretty significantly. I have two single family homes on the North side of Racine (nicer areas) that I purchased for 45k and 57k back in 2012, respectively. Current market value for them is probably in 73k and 91k ranges, respectively, and I get 940 and 950 per month for rent. Hard to believe, but these two properties are identical in size and are probably only 6 blocks away from each other, so market value on them can change pretty drastically within a few blocks. Based on my market values above, the properties are ~10.5% and ~8.2%, respectively. I could probably raise rates on these properties to get them in the 11% - 9% range if I priced aggressively.

I also recently purchased a property this year in West Racine (3 BR) for 44k that I am renting for 925 per month. That one is at ~18%, but obviously in a bit of a less desirable area, so the tenants are a little more work.

I will also be moving out of my personal residence and into a new one later this fall and attempting to rent that one out as well. I'm hoping for 12-1300 per month there, which would leave me between 10-11%

I also have a duplex just south of Carthage a couple blocks off the lake. I have no idea what the market value for this property is. I'd guess around 110k, but I bought it two years ago for 85k. Using 110k, my cap rate would be around 10.5%.