Determining your Cap Rate

[Valerie K.]

Hello BP! Can any experienced investor share their process for determining their personal target Cap Rates? I see a lot of blogs and listen to podcasts where seasoned investors have a distinct target for this number.  All I know is the basics- higher rate, higher risk/higher return.  I have never seen anyone put boundaries around cap rates that define them for specific asset classes or otherwise distinguish what they are looking for.  For example, if I tell you I look for Cap rates of 10 or less, what information does that convey to you?

Any insight greatly appreciated!