Cap rates are pretty compressed right now, historically speaking, so most of us right now are underwriting with some expansion in mind.

I did not want to pay this inflated price and was naive. 2 years later I purchased the same property for $1.2 Million and nothing changed in those 2 years besides everything appreciating and cap rates compressing.

@Jake Fugman and I run an investor focused realtor team in Chicago and lately we’ve seen a shift where we are finding a ton of great deals for clients in the mixed use space above $1m but it seems as though pure multifamily cap rates for 5+ units above $1 million are just compressed (thus values overinflated).

The market could be at the top, or it could just be ROI compressing.

That said, prices have increased quite a bit on multifamilies which has compressed returns.

I'll also have to guess the previous leak 'repair' was also to the drain or trap vs the compression line.  

On the commercial side, it's a similar story in terms of cap rates (they are fairly compressed, but like any general rule, not the only basis on which to evaluate a property) however this is offset by having NNN leases so increased gen-op costs are shifted to the tenants, and value-add opportunities as a way to "force" appreciation as well as generate additional income.  

Do they think cap rates are going to continue to compress forever?

Time compression!

Hey James, we are expecting further cap rate compression.