Sunbelt Multifamily cap rates
For those that have remained active, where are you seeing Class A/B apartments across the Sunbelt trade recently?
Starting to see some pretty compelling discount to replacement cost stories. However, even at pricing ~25% off the peak, still not a very attractive story in terms of cap rates relative to cost of debt for first 2-3 years (assuming floating debt if you believe then SOFR curve).
Saw a deal recently that was around 5.25% t3/t12 tax adjusted. Is that consistent with what others are seeing? How are you all thinking about whether it makes sense to buy or not?
Been seeing around 4-5.5% for class B garden style. The lower leverage given the current interest rate environment has been making deals more difficult to pencil in reasonably.
I keep using the phrase "I need to readjust my eyes", because I'll see a deal with a price per pound that looks really good, but when you model it out the returns are still garbage. If you want to be in the eating sardines business and not the trading sardines business, I think you need to be hitting a stabilized ROC in the low 7%'s. Not many deals are getting there right now.
Where are you seeing most deals get to on stabilized ROC?
Still somewhere in the 6%'s, although lesser secondary/tertiary markets are getting into the 7%'s by year 3/4. Still not super, but much better than stabilizing at a 5.5%.
Looking at a deal now at a 5.25% tax adjusted. these sunbelt markets have a lot of in-place loss to lease so you can convince yourself you can bring that 5.25% to a 5.75% pretty quickly. Still doesn't feel good.
6-6.5% stabilized ROC is the market right now, In-place ect doesn't mean much based on how much proven upside there is.
6-6.5% stabilized ROC is the market right now, In-place ect doesn't mean much based on how much proven upside there is.
I look at these numbers and I feel superior knowing that I buy stabilized in gateway markets at an 9 to 10 cap. Charge into where the masses are panicing and buy everything you can get your hands on.
Umm what? You're not getting a stabilized cap of 9-10 in any gateway market bro.
Closing on a building in NYC at that cap rate in 45 days. Class A.
Also have a MF project in TX, new construction, stabilized, 8 cap.
When you wear blinders you miss 90% of the world.
You buying office dawg?
Lol not just office, probably Class C office in Bozeman, MT lol
Please expand where you’re buying multifamily at a 10 cap
So many ways to define a cap rate but the fact you mentioned t3/t12 shows you know what you’re doing
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