Cap Rates In SE Michigan
Hi,
has anyone had any experience with apartments in southeastern Michigan? I ask because in my research I have found that the going Cap rate is only at around 7.5%! with that rate I cant make ANY money if I go with conventional financing! WTF? this just doesnt seem right. That figure came from a market analysis conducted by Signature Associates, and I think it may be for REIT owned properties... in that cse, could the cap rates for smaller, privately owned apartments be closer to the 9-10% most investors look for?
thanks,
-Newbie-
Here in SE MI I'd say that those cap rates are probably just a little low in the suburbs, but not that low in Detroit or in some of the less desireable suburbs like Taylor.
If the property is in Ann Arbor, for example, 7.5 is a great cap rate. People will do anything to get a multifamily in that college town.
But go to Detroit, Hazel Park, Taylor, Pontiac, and similar communities and you can get in the 10%+ range easily. But of course, the risk is higher as well.
Decision Man,
Thanks for the reply. Glad to hear what you had to say; the low risk isn't too much an issue to me as long as the apartments are in suburban areas and not in detroit or pontiac metro areas.
Do you know of any low rent areas Near Novi and northbrook ? maybe towns that are still farm populated, and havent begun to grow yet? Thanks!
-New Guy-
Most older multifamily stuff in Grand Rapids is at a 9-9.5 cap
so if someone offers me a cap rate of 22 in detroit, i should jump on it???
someone actually did about 4 months ago.
! ! ! ! ! If you do, bring your gun, a few body guards, and get a good fire insurance policy. I think I know that building!
:-x