What kind of cap rate we should buy and what kind of cap rate we should sale?

What kind of cap rate we should use? low or hight?
In Buying Property - Asked by Genis T. - Mar 14, 2010
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Answer(s)

Jean-Paul d.
Broker/Agent
San Diego, BC

Buy high - sell low!

Mar 15, 2010
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Lisa A.
Owner/Investor
Phoenix, AZ

Generally yes, you want to buy high (especially now) and sell low. BUT just like you, other buyers are looking at the market and are purchasing at higher cap rates. So just because you WANT to sell at a low cap, does not mean that's where you'll wind up trading. There are alot of factors, including location, area vacancy etc.

Mar 15, 2010
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Michal B.
Broker/Agent
Miami Beach, FL

Cap rate is a % ratio of net income over purchase/sale price. The cap rate is increasing by the higher net income and the lower price therefore you want to purchase at the highest cap rate possible and sell at the lowest cap rate.
Cap rates vary for different types of properties in different markets. If you are thinking multifamily I wouldn't buy anything under 8% cap rate that fully leased but with offices and retail I would go much higher, i.e. 10%.

Mar 15, 2010
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