How do I find typical cap rate in San Jose area?

In Buying Property - Asked by Alex L. - Sep 21, 2015
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Answer(s)

George L.
Broker/Agent
San Rafael, CA

It varies, apts. 4+-, retail 4 to 9.
I have been searching for 1.5acre parcel to four acres and will go to million per acre and do a tear down if in a good area..
What do you have.
George Lyons 415 482 3145

Sep 21, 2015
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Moustafa E.
San Jose, CA

The cap rate has number of factors each paly very important rule in determining the appropriate cap rate. Apartment complex is different than retail, light indusial, office etc. Also Zip code and area play another factor on the cap rate. Lease term and structure, tenant and credit rating. Property desirability. Sorry the question is too general, the answer can be too wide. And the most important factor is size of investment as for larger investment you most likely you will deal with institutional investor not Jo Mo investor. Knowing the appropriate cap rate also help the agent to get in a saleable listing. So to answer this question like what George said between 5-9 I will say it run between 1.5% to 11% you know if you can justify these numbers to the investor or the buyer.
Feel free to call me with specific question
Moustafa
Corporate Commercial Real Estate Counselors CCREC

Sep 22, 2015
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Julio G.
Broker/Agent
Tampa, FL

To begin with, there is no typical of anything; you must determine what market segment you want to derive the cap rate for; are you looking at Multifamily, Office space, retail, industrial space and what specific demographic/geographic area in the San Jose. Then you need a quality source for this information, one that you trust, one that uses sound principles of real estate appraisal.
1) Search out multiple comparable properties, recent sales from the local property appraisers office/web will suffice (make sure they are compatible and in in same area.
2) inquire and obtain income and expense of each to determine (NOI) net operating income
3) Divide the NOI by the Valuation determined for the comparable property to get the capitalization Rate for property
Now do the same for all the comparable properties you selected and determine their CAP rates; average them out to determine a market area CAP rate for that type of property. Please note results may vary by demographic area and selection of comparable properties, it is a precarious art-form and not all results are the same and each investors weighs-in this data differently when making decisions.
If you have any questions on using CAP Rates to make sound investments in the Tampa Bay area or in Florida contact me: 813-514-8168 or at ShorebirdRealty@outlook.com

Sep 24, 2015
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