8 Unit On OSU Campus
Just purchased an 8 unit building on the Ohio State Campus.
The building in just feet away from a new 200 million dollar campus development project.
The building is currently not at full occupancy and the current cap rate is 12.24%.
I will be making some improvement this year: New roof, new mechanicals, more insulation, energy efficient appliances, etc. I will be financing these improvements.
Year 2 with full occupancy shows a cap rate of 15.07%.
Question:
The cash flow on the property is nice (about $1,300/mo). If I sell in year 2 what cap rate should I sell at?
I do not want this property to sit on the market. What is attractive cap rate for quick sale?
On your cash flow pro-forma, be sure to highball the insurance calculations. Student housing is a tough insurance market presently...just a small piece, but could mean a lot...
Oh yeah, GO BUCKS!
[addsig]
The insurance is crazy high, but what are you going to do?
Not much, just wanted to make sure you figured it in accordingly ("high"
.
Carry a deductible $10,000 or higher...
In my opinion, both CAP rates are attractive.
However, I think the answer to you question is:
Contact some good local realtors who specialize in commercial properties and ask what the average CAP rate for that area is. If the average is 9%, your 15% property should stand out.
Good luck, Brian
Are you looking to go to gas tankless water heaters or electric tankless water heaters??
I wanted to do the same on some of our units, just because they last so darn long (twice of a normal water heater).