All Forum Posts by: Jeff Owen

Thank you all for the feedback. I understand the calculations in determining the CAP rate or calculating the purchase priced based on the NOI and CAP rate. I'm more trying to validate that what the broker is suggesting is a fair CAP rate so I can determine a purchase price based on the NOI. I'm trying to avoid over-paying for the property by not having enough information to validate the CAP rate. I can look on LoopNet, but I think I can only see what is for sale. I cannot see what has sold, I don't believe, or necessarily for how much or what the P&L was associated with the sale. That's a great idea, regarding reaching out to some property managers and other brokers in the area.

Is there an objective resource to use to determine the CAP rate for a commercial multi-family property? I want to be armed with better information than just what the seller's agent is providing me. I'm not finding a lot of tools that I can use, and even looking at recent sales may not give me enough info to back into the CAP rate unless I happened to also have the P&L info for the property.

Your thoughts are greatly appreciated!

I had considered valuing the properties both ways to ensure the numbers work. However, I was more concerned with how the investor community would generally value these so I have a sense of what my exit strategy might look like.

I am looking at a group of properties, but I am not certain whether they should be considered residential properties or commercial. The seller says all but one unit is on one lot, and the other property is on an adjacent lot. There are 12 units, total, and it is a mix of single-families, duplexes, and quad. Even though they are "on the same lot," each building has a separate street number. So, the seller is valuing the properties based on NOI and CAP. However, I suspect this is more of a collection of residential properties and not a true commercial property.

How do I go about determining the proper way to value this property?  If it matters, this is in TN.

Very well said, Meghan. Thank you for posting this and teaching out to those who may have lost so much. I also enjoyed your podcast I listened to the other day, about type story in REI and starting the TWO clubs in your area and helping others to do so, also.

Thank you all, for the positive feedback...working on getting educated!  :D

A friend of mine recommended this site to me, and I just completed the online course (Path to Purchase).  I have wanted to get into real estate investing for years, but I have had to wait until my wife was on board with the idea.  So, it looks like this is the year!  I am excited, but I am currently working on getting up to speed with ideas, concepts, do's and don't's, before just jumping in with both feet.  I'm keeping an open mind to try to figure out what will work best for my goals of long-term wealth building as well as creating cash flow to give our family more flexibility in career goals as well as the opportunity to bless others.  My wife and I both work, so I will be exploring opportunities that are more hands-off, rather than trying to flip properties for quicker profits.  I am more interested in buying and holding.

I'm looking forward to learning from this community as well as giving back to this community.