One can't understate how important compressed cap rates have been to multifamily's success over the last number of years.

Everything would be newish so cap ex costs should be lower than average but this would be expensive to do.

The Rockville section I'm at (King Farm) is crazy overbuilt all around the Shady Grove metro, capping appreciation and rent increases, at least in my experience.

After Year 5, you generally are only growing income if revenue increases faster than expenses AND cap rate expansion (hard to defy the market here).Finally, in real estate, as Taylor said - any real estate offering with an IRR >20% is a red flag right now.

Most pro forma are inflated and underestimate cap ex, repairs, tenant turnover costs.

There are a lot of multi-family buildings on the street, but I don't know if mine will fit within the 12.5% cap.

@Kyle Fanene very difficult, all investors I know from CA are in other markets, double digit net caps are to be had if you know where to look and have a team helping you,Good Luck 

From what I have read and heard, a conservative underwriter should project the exit cap rate at least 50 to 200 bps higher than the purchase cap rate.

You might find out that they can make rent happen at levels higher than they are letting on.How much are they below market rents and what's the cap rate in the area?

The area was pretty quiet and we were hoping to owner-occupy but wasn't sure if the property is safe in this area.I was just wondering though - how much is the cap rate in Ray Town and is the rent to price ratio reasonable in Raytown, if you don't mind sharing?