What is a good cap rate???

[Yasmin Mohamed]

My 2018 goal is to purchase a triplex or quad in the Philadelphia area. For the past 4 months I have been listening to podcasts and reading books about real estate. I keep hearing different rulings regarding a good Cap rate. What do you think is a good cap rate for a Multi-Family home?

[Brent Coombs]

@Yasmin Mohamed, some might say: the lower the cap rate (eg. 4%), the better!

Others will say: the higher the cap rate (eg. 10%+), the better!

Who's right? Well maybe, depending on their circumstances/goals, they're BOTH right!

And if their circumstances/goals were different, they could also - both be wrong! 

Can you do a bit of research to see why I came to those conclusions? Here endeth your first lesson.

By the way, for triplexes and quads, cap rate is NOT used to determine value anyway! Tell us: what is? Cheers...