Cap rate of 7.53% and a Cash on Cash Return of 11.8 %

If a property has a Cap rate of 7.53% and a Cash on Cash Return of 11.8 % is this still a good property to further pursuing? Thanks.
In Buying Property - Asked by Andrew S. - Jan 14, 2009
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Answer(s)

Timothy G.
Broker/Agent
Burlingame, CA

The above information only proves that you are borrowing money at a rate lower than the return on the property, called positive leverage. Generally buying positive leverage is good, yet location, location, location and comparative yields in that location will define a good deal

Jan 14, 2009
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Rand W.
Owner/Investor
Tucson, AZ

Andrew,
If you can find ANYTHING in this market that will return more than 7.5% on you money then make that deal. You need to take an economics class so that you understand what these basic terms mean.

Jan 15, 2009
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Chris S.
Broker/Agent
Coeur D'alene, ID

Not enough information to make an informed decision. These rates are basically the "curb appeal" of a potential investment. You need to do considerably more homework.
On a macro level the 7.5% cap and 11.8% Cash on cash are not bad, but you can do better depending on market and property type.

Jan 16, 2009
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