What are caps? I bought a 3 plex looking for 4 plex next

[Kevin Malone]

Can anyone please help me understand what a 10 cap is vs any other caps I have no idea .... I'm looking at a 4 plex online that says based off 10 cap.

[Kevin Siedlecki]

@Kevin Malone - cap rates are used to value commercial properties. If a seller is using cap to value their 1-4 unit property, they either a) don't know what they are doing, or b) really know what they're doing, and know that the cap rate valuation is better than market valuation. 

Anyway, to answer your actual question, a cap rate is the ROI on the property if it is bought all cash.

NOI / Purchase Price = cap rate