Pounced on a multifamily deal with a 6.5% cap rate, in-place rents 20% below market. With pro-forma rents and value-add renovations, expect significant upside. Last year's prices were inflated, and waiting till next year might mean missing out on favorable interest rates.
I agrree that timing is crucial in multifamily deals, but I'd like to dive deeper into the numbers. A 6.5% cap rate is decent, considering the in-place rets are 20% below market. However, I'm curious aobut the pro-forma rent bumps - what's the projected increase, and over what timeline? Are we looking at a 3-5% annual increase, or something more aggressive? Adidtionally, what's the expense ratoi looking like, and how will the value-add renovations impact operational costs? Lastly, how is the loan sizzed to the cap rate, and what's the debt service coverage ratio? These fatcors will significantly impact the deal's overall viability and potential for upside.