What exactly is a reversion cap rate in multifamily investing?

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When investing in multifamily properties, it's important to understand the concept of the reversion cap rate. The reversion cap rate refers to the cap rate that investors expect to receive when they sell the property at the end of their investment period.


For example, let's say an investor purchases a multifamily property with a cap rate of 6%. They plan to hold onto the property for 5 years before selling it. At the time of purchase, they expect the reversion cap rate to be 5%. This means that when they sell the property in 5 years, they expect to receive a 5% cap rate on their investment.


Another example is if an investor purchases a multifamily property with a cap rate of 7%. They plan to hold onto the property for 10 years before selling it. At the time of purchase, they expect the reversion cap rate to be 6%. This means that when they sell the property in 10 years, they expect to receive a 6% cap rate on their investment.


The reversion cap rate is an important consideration for investors because it helps them determine the potential return on their investment. By projecting the reversion cap rate, investors can estimate the future value of their property and determine whether it's a good investment opportunity.


It's worth noting that the reversion cap rate is an estimate, and there are many factors that can impact the actual cap rate when the property is sold. Factors like changes in the real estate market, interest rates, and the property's condition can all affect the cap rate when the property is sold.


In summary, the reversion cap rate is an important concept in multifamily investing. By projecting the reversion cap rate, investors can estimate the potential return on their investment and make informed decisions about whether a particular property is a good investment opportunity. Be sure to consider the reversion cap rate when evaluating multifamily properties.


My group, the Benjamin Z Miller Investor Networking Group, meets every Sunday on Zoom. I created the group for new and experienced investors to network and make more contacts.


If you would like to learn more about multifamily investing, you should join the Benjamin Z Miller Investor Networking Group.
Once you attend one of the Sunday meetings you will receive a Google Sheets document with the phone and email of the other investors that attended.


Before you do any investing you should invest more time and money in your financial and legal education. I offer education and training to new investors, landlords, engineers, doctors and dentists, and many others that would like to learn how to enjoy the benefits of multifamily as quickly as possible.




If that sounds interesting contact my office by going to www.benjaminzmiller.com and fill out the contact form.


You also can register at the link below:


https://www.linkedin.com/events/6-30pmukeverysunday-benjaminzmi7018644896827781120/


or:


https://www.meetup.com/benjamin-z-millers-investor-networking-group/




I hope that helps and good luck with your investing! If you learned something, maybe share this video with your friends. You might be able to help them also.




Benjamin Z Miller
www.benjaminzmiller.com
1-817-203-4160


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