Cap Rate Mirage

I'm calling foul on the supposed 'value-add' play in small multifamily acquisitions. In-place vs. pro-forma rents often disguise looming expenses. Let's not forget, a low cap rate doesn't always translate to long-term profitability. I've seen too many buyers get burned by underestimating renovation costs and overestimating rent growth. A healthy dose of skepticism is needed when evaluating these deals.