Analyzing apartment complex deals

[Marshall Fairley]

I’m looking to pick up a large multi family complex. 1. What is an adequate Cap rate for a 14m dollar project? 2. How much earnest should be good consideration for same price project? 3. What are the basic parameters I should consider when purchasing multi family? I’d really like to speak to someone on this matter. Pretty quickly

[Nick B.]

1. Cap rates depend on property class, location, and general market conditions. Right now in DFW cap rates range between 4.5% for brand new properties and 6.5-7% for C class that needs some work.

2. 1% of the sale price is usual but many buyers offer more and make it nonrefundable from day one.

3. You need to read a few books on the subject. "Buying and Selling Apartment Buildings" by Steve Burges is a good start.