Readers of my blog will know the following:

• Accurate cap rates for residential and smaller commercial multifamily buildings in the Boston Area is information that is not available.
• Gross Rent Multipliers (GRM) are more readily available for certain markets and provide a way of comparing multifamily income properties.

Those who examine the data will notice that certain markets are more rewarding than others from the GRM figures.  However, the number that GRM represents is only the reward part of the equation.   The missing figure is risk.  Investors have to always consider the risk to reward ratio.

The risk figure is much more difficult to quantify.   I’ll start by listing some of the risk areas that are involved with multifamily income property investing.

• Tenant Availability
• Tenant Quality
• Economic Environment
• Government Rules & Regulation
• Crime
• Housing Market Changes
• Liability
• Acts of Nature (or God of your Choice)
• Financing

From time to time, I’ll touch upon each of these risk areas and risk mitigation in my blog posts.  Stay tuned!