The cap rate is the annual net operating income before taxes divided by the purchase price or present market value. The cap rate shows the net income in proportion to the purchase price. Multifamily buildings are sold by commercial real estate brokers. Some real estate practitioners are familiar with both residential and commercial property, but most specialize in one area or the other. Kelsey says apartment building buyers should solicit the advice of an agent who specializes in this type of property.
Multifamily buildings have competition.
Buyers should investigate local vacancy rates, rent control restrictions, the pace of new construction, employment levels and other marketplace factors. Rents tend to increase when construction of new multifamily housing is prohibitively costly and vacancy rates are low. Conversely, rents tend to decrease when new construction comes online and vacancy rates are high. Reduce debt and improve your credit now. This is almost too easy.