Development of GRM

[CANative]

Have cap rates for apartment complexes seen a change in the last 6 to 12 months?

 

[George Hatch]

You guys are talking about GRMs of 90 and 100. Just wait until you get assignments for 2-4s with GRMS in excess of 300, like we have had here during our recent boom. The pricing (and hence the GRMs) is dropping, but the GRMs may not ever drop below 100.

The pricing is the pricing. You can say that it "should be" higher or lower based on historic trends in pricing or GRMs, but what "should be" by definition...isn't. Market Value is about "what is", not "what should be".

 

[CANative]

My area doesn't have a lot of multi-family activity but it seems to me GRMs of 300+ for multis usually occured for two units and sometimes three units when the units were large and when locations such as view or water frontage or other resort/recreational factors were involved. Otherwise, 2's were 225 to 250, 3's 185 to 240, 4's 135 to 185. (all +-)

 

[Elliott]

redfish asked, Is the investor inelasticity to the anticipated reversion and extended or shortened holding periods really accounting for a 60% decrease in GRM.


Wha? I think rental owners say things like, "I bought it because it will
be a good cash cow." Rents are stable, values have declined.