Buying a property with 20 to 30% CAP is too risky?

I come across very high cap generating properties.
Like in Detroit, it's not hard finding 30% cap multi family homes.
Putting aside future appreciation which nobody knows, higher cap is better than lower cap in terms of ROI. If it has track record of decent net income, I think it's good to invest. Any comment on this investment?
In Buying Property - Asked by Kingston R. - Feb 8, 2010
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Answer(s)

Thomas E. A.
Broker/Agent
Lake Havasu City, AZ

It really depends on the financial strength of the tenant and the type of businsess that occupies the property. Is this a single-user unique property that cannot be used for something else? I have not seen 30% but I have seen 20% cap rates.

Feb 8, 2010
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Kingston R.
Owner/Investor
Greensboro, NC

An answer to Thomas,
No, this is a mutiplex residential in lower income area. i.e. $45-50K/house hold income.
It ranges from duplex to 6 plexes. Some properties have Section 8 tenants only.
In deciding, what factors do you consider?

Feb 8, 2010
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Gregory G.
Broker/Agent
San Francisco, CA

Deferred maintenance.
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)968-6065
gregory.garver@gmail.com

Feb 26, 2010
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