Apartment Loan Store

(503) 376-7303 Nationwide Since 1997

 

Everyday 8am to 9pm Eastern

Get Matched To Your Best Loan         

No Obligation, No Credit Check

Connect With Your Loan Advisor

Relax While We Shop Your Options

Compare The Best Offers

Choose the Best Match

Loans $750,000 to $500,000,000
Better Business Bureau Rating A+

CAP Rates for Apartment/Multifamily Properties in Charlotte North Carolina

Multifamily Apartment Cap Rates

Cap Rates for Multifamily Apartment properties are relatively flat for 2019 in this market. Averaging 4.60 for newer Luxury Metro properties, 4.87 for A Class, 5.24 for B Class, 6.02 for C Class and 6.40 for Value Added Acquisitions.  With the economy adding more jobs and moderate wage increases rents are stable and vacancies are less than 5.00%. The continual increase in single-family home prices throughout 2019 has strengthened the demand for rental units. The volatility of the Stock Market has pushed more investors into US Treasury Bonds and Income Property Investments.  The increase in residential interest rates during the first quarter of 2019 initially increased the demand for rental units.  In June of 2019 interest rates came down significantly, but the demand for multifamily rental units is still increasing.   

 

Multifamily Apartment Cap Rates
Rates as of: 04/01/2020
Description Cap Rate
New Luxury Metro 4.60
A Class 4.87
B Class 5.24
C Class 6.02
Value Added Acquisition 6.40

 

DON’T FALL INTO THE CAP RATE TRAP

“Are you kidding me?” my client asked.  “You’re telling me that the property taxes are going up by $19,500 when the county reassess the property I’m buying based on the purchase price after I own it?”

“Yes”, I answered.  “In California they do that.” 

“Well then”, he said, “ that means I’m buying the property for a 4.70 cap instead of the 6 cap the listing agent said it was. That means I’m getting ripped off and the listing agent lied to me. Why would he put the seller’s lower property taxes in the list of expenses and calculate a 6 cap? This is the only property I’ve identified in my 1031 exchange.  What am I going to do?”     READ MORE

 

With a stronger economy and the increase in jobs and moderate increase in wages, rents have remained strong on multifamily units but are trending towards being flat in 2018.The increase throughout 2017 in single family home prices have kept more working class families renting.On the flip side there were 1.2 million new homes created out of which 854 bought and 365,000 rented.The millennial’s are favoring renting A and B quality apartment units rather than homeownership. More Seniors are choosing to rent as well.These factors show that demand for rental units will continue to be steady.

Realpage has reported that absorption of existing rental units picked up in the 2nd and 3rd quarters of 2017.Currently there are many multifamily units being added to the market awaiting completion.This is expected to moderately increase vacancy rates. Multifamily permits have slowed in the last 2 quarters of 2017. With the increase of new apartment units the supply is slightly expected to be higher than demand resulting in a slight increase in market vacancy.

About the Charlotte, North-Carolina Real-Estate Market

The Median household income of a Charlotte resident is $53,274 a year.

In Charlotte, NC, $212,100 is the house worth median. There has been an increase in the value of homes in Charlotte in the last year of 8.9 percent. Regarding the following year, it has been forecasted that the value of houses will increase 6.5 percent.

Per square foot, the list cost median is $144 in Charlotte. The Metro Area of Charlotte-Concord-Gastonia Metro has a lower per square foot list cost median of $129.

$285,000 is the cost median in Charlotte for homes presently listed. As far as rent costs go, Charlotte has a rent cost median of $1,445. Charlotte-Concord-Gastonia Metro Area has a slightly higher rent cost median of $1,450.

When it comes to the real estate economy, an important ingredient is the foreclosure rate. The foreclosure rate can have a big impact on the value of homes.

The lower the foreclosure rate, the higher the home value. If the foreclosure rate is super high, the value of real estate could go way down. If the value of real estate goes far down throughout much of the nation, we could be in a recessionary period.

In Charlotte, North Carolina, for each 10,000 houses, 2.0 houses are foreclosed. The Metro Area of Charlotte-Concord-Gastonia Metro has a lower rate of foreclosure which is 1.4 houses foreclosed for each 10,000 houses. The United States of America has a foreclosure rate of 1.6.

When a homeowner is on their way to foreclosure, there is a first thing that happens. It is mortgage delinquency. What is meant by mortgage delinquency? Mortgage delinquency is the condition of a homeowner missing a payment on their mortgage.

Charlotte has 1.8 percent as the percentage of mortgage delinquencies. This is higher than the mortgage delinquency rate of the United States which is 1.6 percent.

The recession in the year 2008 wreaked havoc on the real estate economy as well as the economy as a whole in the United States. It caused the value of homes in our nation to drop more than 20%.

This caused many homeowners to presently be underwater regarding their mortgages. What does it mean to be underwater on a mortgage? It means that the value of a home is less than the mortgage debt of the home.

10.3% is the percentage of homeowners in charlotte who are underwater on their mortgages. The Metro Area of Charlotte-Concord-Gastonia has a lower underwater rate of 8.0 percent.

We are now moving on to Charlotte North Carolina commercial real estate. We are going to cover a little about two areas:

1. The office market of Charlotte

2. The trend of tenants moving downtown to live

Regarding the Charlotte office market, leasing has gone back to more normal levels after a very strong quarter. In the most recent 4 quarters, 3.8 million square feet of space has been leased by tenants.

There was a 20 basis point drop from the first quarter in availability in the market. 15.2 %. There was also a drop to 18.8% in availability of Class A, a decline of 40 basis points.

Quarter over quarter the asking rent price increased 0.6 percent. This was an increase to $26.09 per square feet. Quarter over Quarter the asking rent price of Class A properties went up 0.9 percent. This was an increase to $28.72 per square feet.

During the last 6 month period through May of 2018, there was a big drop in sales of office property. The total sales during this period was $426 million. This was a drop of 44% when you make a comparison to the previous six month time period in which $756 million was sold.

Now, when it comes to the trend of tenants moving downtown to live, they like the new option of living in factories and warehouses that have been converted into living spaces. They also like the CBD that has groundup construction.

Some companies want suburban office parks as an option for locations which is a change in the suburbs to urban core that exists in so many big metro areas in the United States.

In the Charlotte suburban areas, developers are emphasizing that these suburban areas are a place to live-work-play at. And it looks like it’s working out well. Not only are tenants within the region moving to them, but also employers are moving from other markets to the region which benefits these projects.

For a great source to find out more about apartment real-estate in Charlotte, go to http://www.biggerpockets.com/

Apartment Loan Store is proud to serve the entire Greater Charlotte area:

  • Concord
  • Gastonia
  • Rock Hill

U.S. National-Level CAP Rates and Expected Rates of Return by Property Type, Sector, Class and/or Segment

   

Stabilized Property Acquisitions

Value-Add Property Acquisitions

   
CAP Rate
 
AD Over 10-Yr Treasury
Expected Return on Cost 
 
AD Over 10-Yr  Treasury
Property Type
​Sector
Class/
Segment
H1 2017
(%)
H2 2017
(%)
Change
(bps)
H1 2017 (%)
EOP 1.49
H2 2017 (%)
EOP 2.45
H1 2017
(%)
H2 2017
(%)
Change
(bps)
H1 2017(%)
EOP 1.49
H@ 2017 (%)
EOP 2.45
Office
CBD
ALL 6.61 6.63 2 512 418 8.22 8.24 2 673 579
AA 5.19 5.24 5 370 279 - - - - -
A 5.95 5.99 4 446 354 7.12 7.10 -2 563 465
B 6.85 6.84 -1 536 439 8.02 8.03 2 653 558
C 8.61 8.64 3 712 619 9.83 9.8 6 834 744
Office
Suburban
ALL 7.64 7.76 11 615 531 9.21 9.33 11 772 688
AA 6.20 6.31 11 471 386 - - - - -
A 6.96 7.07 11 547 462 8.06 8.18 12 657 573
B 7.97 8.13 16 648 568 9.20 9.27 7 771 682
C 9.30 9.46 16 781 701 10.45 10.60 15 896 815
 
Industrial
ALL
ALL 6.72 6,73 1 523 428 7.71 7.74 3 622 573
A 5.48 5.54 5 399 309 6.34 6.41 8 485 396
B 6.59 6.52 -7 510 407 7.53 7.53 0 604 508
C 8.13 8.16 4 644 571 9.31 9.33 3 782 688
 
Retail 
Neighborhood
Community
ALL 6.94 7.12 18 545 467 7.92 8.14 22 643 569
A 5.62 5.66 4 413 321 6.59 6.85 26 510 440
B 6.83 7.03 20 534 458 7.81 8.00 19 632 555
C 8.39 8.68 29 690 623 9.36 9.58 22 787 713
Retail
Power
ALL 7.36 7.54 18 587 509 8.25 8.47 22 676 602
A 6.11 6.16 5 462 371 7.21 7.31 10 572 486
B 7.30 7.47 16 581 502 8.06 8.40 34 657 595
C 8.70 9.03 33 721 658 9.52 9.74 22 803 729
Retail
High Street
                     
A 4.23 4.37 13 274 192 - - - - -
                     
 
Multifamily
Infill
ALL 5.26 5.32 6 377 287 5.95 6.03 8 446 358
A 4.60 4.67 8 311 222 5.34 5.41 7 385 296
B 5.15 5.20 5 366 275 5.78 5.87 9 429 342
C 6.06 6.12 6 457 367 6.75 6.81 7 526 436
Multifamily
Suburban
ALL 5.67 5.74 7 418 329 6.33 6.45 11 484 400
A 5.01 5.10 10 352 265 5.62 5.71 9 413 326
B 5.53 5.61 8 404 316 6.16 6.26 10 467 381
C 6.48 6.50 2 499 405 7.22 7.37 15 573 492
 
Hotels
CBD
ALL 7.85 7.91 6 636 546 - - - - -
LUXURY 6.83 6.92 8 534 447 - - - - -
FULL SERVICE 7.55 7.62 8 606 517 - - - - -
SELECT SERVICE 7.94 8.01 8 645 556 - - - - -
ECONOMY 9.10 9.11 1 761 666 - - - - -
Hotels
Suburban
ALL 8.39 8.44 5 690 599 - - - - -
LUXURY 7.42 7.50 7 593 505 - - - - -
FULL SERVICE 8.07 8.14 7 658 569 - - - - -
SELECT SERVICE 8.46 8.53 7 697 608 - - - - -
ECONOMY 9.59 9.58 -1 810 713 - - - - -

 

 

 

Other Cities in North-carolina served by Apartment Loan Store

  • Charlotte 
  • Raleigh 
  • Greensboro 
  • Winston-Salem 
  • Durham 
  • Fayetteville 
  • Cary 
  • Wilmington 
  • High Point 
  • Greenville 
  • Asheville 
  • Concord 
  • Gastonia 
  • Jacksonville 
  • Rocky Mount 
  • Chapel Hill 
  • Burlington 
  • Wilson 
  • Huntersville 
  • Kannapolis 
  • Hickory 
  • Apex 
  • Goldsboro 
  • Salisbury 
  • Indian Trail 
  • Monroe 
  • Mooresville 
  • Wake Forest 
  • New Bern 
  • Sanford 
  • Matthews 
  • Thomasville 
  • Garner 
  • Asheboro 
  • Cornelius 
  • Holly Springs 
  • Statesville 
  • Kernersville 
  • Mint Hill 
  • Kinston 
  • Lumberton 
  • Havelock 
  • Shelby