My broker told me a 7 cap today would have been a 5 cap eighteen months ago and now I can't place that number anywhere useful

Closed on a 32-unit in El Paso in February, $2.55M, trailing NOI was $198k so call it a 7.75 cap on purchase price. That spread over a 7.1% agency rate actually gave us about $31k annual cash flow after debt service, not great but not negative. The basis was the thing that made it work. We were at $79k per door on a 1980s brick property where replacement cost is closer to $130k, and that gap is where the margin lived, not the cap rate itself.

The Tucson number you're describing is exactly the problem. A 6.5 cap at 7% debt is negative leverage by definition, and no amount of broker optimism fixes that math. What I'd want to know before spending another hour on that 48-unit is what the actual per-door basis looks like versus what has traded in that submarket in the last 90 days, not 18 months ago. In El Paso I found three comps under $85k per door that closed Q4 last year. If Tucson sellers are still anchored to 2022 valuations the deals are not there yet, and the 7 cap your broker is quoting you probably exists in secondary Texas or New Mexico markets where the denominator has not been inflated the same way. Chase the per-door basis first and work the cap rate backward from there.

What's the actual rent-to-ask ratio, because $268k NOI on a $4.1M ask is a 2022 seller who hasn't blinked yet.

Tucson is exactly the problem, not the cap rate environment generally. That market got bid up hard by out-of-state syndication money in 2021 and 2022, and sellers there still have those comps in their heads. The $268k NOI on that 48-unit is probably also before a real management fee, which would knock it closer to $248k if someone is actually running it at arm's length. I picked up a 24-unit in Dayton last fall at $1.35M with a $97k trailing NOI, and even at 7.25% on the debt it cash-flowed day one, thin but real. The issue is that actual 7 caps mostly exist where appreciation is slow and the story is yield only, and buyers conditioned on Sun Belt growth markets just do not want to hear that.

7 cap on paper means nothing if the T12 is owner-managed with no management fee line and deferred maintenance buried in capex you're supposed to ignore. That 48-unit, I'd want to know what they're counting as maintenance because I've seen brokers strip it to like $150 a door when realistic is closer to $400-500.

The basis that's actually working for me right now is off-market stuff where a tired landlord hasn't refinanced and needs out, not anything that's been shopped to five buyers already with a polished OM.