Poll, what is your acceptable Cap rate?

[Clint Harris]

Interested in hearing what different people have to say. I’m currently evaluating a triplex in Wilmington North Carolina, Gross rent multiplier is 8.1, net income after financing is solid, Cap Rate is at 6%. But that varies depending on the purchasing price. Asking you guys, when you were looking at a deal, what Cap Rate are you shooting for?

[Immanuel Sibero]

@Clint Harris

It's a triplex, you would be stuck on the sales comps of recently sold similar properties? You can calculate the cap rate of the triplex for whatever reason but that cap rate would have little relevance in determining the value of the triplex.

So when I look at a deal such as SFR, duplex, triplex, fourplex, I go straight to CoC or IRR or both. Cap rate is just not useful in this case. Gross rent multiplier is a variant of cap rate, essentially does the same thing... so it's about as useful as cap rate.

Cheers... Immanuel