when unsure and estimating it is better to lower the ARV as opposed to raise it. conversly it is better to overestimate the rehab costswith this in mind if you calculate your numbers and the property seems like a good deal, then get it. if afterwards the rehab ends up being cheaper and the appraisal is for more, that just means you got a better profit.if you don't lower ARV and raise rehab estimate and there is something uncovered during the rehab, or the houses in the area are already around a cap, then you may be stuck in an upside down mortgage

I know Palm Springs passed a cap on the number of STRs per neighborhood.

Hey Alex, this kind of seems like a can of worms that would is best sorted out by a capable professional.

Fannie Mae) have a cap of 10 total financed properties.

So my goal for a lot of my clients is to find a cap rate close to 5.5 or better with investment grade tenant and long term lease in a strong suburban area.6.

i.e.) can 5 unrelated adults live in a 5-bedroom house or is there a cap? 

Daniel- I think it is a huge mistake if you don't have a cap-ex acct.

It has a cap rate I'm looking for.

@TJ WoolumIt sounds like one part of the confusion here is this "small multi-family" property might be considered a residential property (value based on comps); not a commercial property (value based on cap rate / NOI).I have seen this a number of times; a residential agent lists a small commercial multifamily property (5+ units) on the MLS or you go onto Loopnet, and some commercial broker has listed a 3-family property as a commercial multifamily with a cap rate, and it becomes confusing about how you value it, and how they value it.If this property is 1-4 units, it will/should be valued off of sale comparables.

As @Chris Seveney said a cap 2 isn’t a cap 2.