Cap Rates Don’t Tell the Whole Story Institutional buyers and brokers love to anchor everything to cap rate. Cap rate.Cap rate.Cap rate. But in the small multifamily space—duplexes, triplexes, fourplexes—that narrative is often incomplete. Many of these properties don’t trade based on cap rate at all. They trade because: - A buyer wants to owner-occupy - A family member is being housed - Someone plans to hold long-term - A value-add investor sees repositioning upside - There’s potential to add units or convert to condos Now layer in reality: You have a seller who has owned the asset for 20, 30, even 40 years.Rents are often 30–50% below market. On paper, the cap rate looks weak—or completely unworkable. So the typical broker response is:“Doesn’t pencil.” We see it differently. You’re not buying the current income stream.You’re buying the delta. The spread between: - Existing rents - Stabilized market rents That’s where the value lives. This is why we go direct-to-seller and structure seller financing: - Control the asset without bank constraints - Reposition rents to market - Increase NOI - Double the value—sometimes more—without relying on initial cap rate metrics Cap rate matters. But it is not the full story—especially in fragmented, under-managed small multifamily. The real question is: What does this property become once properly operated? That’s the game we play.