10% CAP

I am thinking of buying retail property under $3M as of now. I see the CAPs are in the range of 6 to 8% mostly in the San Jose CA (this is where I live).
I am hoping to buy something at 10% CAP? Is this feasible in this current market? If yes, what state/area this is possible (not the places where employment took a major hit).
In Buying Property - Asked by Srini P. - Jul 30, 2009
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Davide P.
Pinole, CA

Finding anything in the SF Bay Area with a 10%+ cap is going to be nearly impossible unless it is fully vacant and in bad condition (i.e. smaller multifamily units). Also, keep in mind that the cap rate is just a "snap shot" of the property. For instance, there is a retail property suggesting a 10.5% cap rate. After applying the numbers the investor’s cash flow was about 1.5-2% before taxes! You will be able to find 10%+ cap rates anywhere; CA, Atlanta, Las Vegas, etc. Every market is going to have its positives and negatives. Personally, in state I recommend the Bay Area or San Diego. Out of state I would personally say Albuquerque, NM.

Jul 31, 2009
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Chris S.
Coeur D'alene, ID

Yes it is possible. More and more investors (including those in California) are focusing on the rate of return and they are not willing to accept the 6, 7, 8 or even 9% caps seen a year or two ago. We are negotiating several large transactions in the high 9%, low 10% range currently. In fact we almost had a deal put together on a small project in that same range.
If you want to stick with California, I am sure you can find something if you hook up with a good commercial broker. If you want to look outside the area, let us know. I am sure we could find you a quality investment in that range.

Aug 3, 2009
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Paul S.
Glendora, CA

I have a California NNN leased investment that will start out at a 12% cap rate. The business is over 50 years old in the same location. Listing ID 15972904.
Paul Sylvester, CCIM

Aug 5, 2009
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Srini P.
San Jose, CA

Thank you Paul. I will reach out to you if am interested in this property.

Aug 6, 2009
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Gregory G.
San Francisco, CA

How much cash have you set aside for this particular investment? I will bring you down to Earth and then send you some listings.

Aug 14, 2009
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