A lower Cap, but higher appreciation potential or vice versa?

[Derek Lamonde]

Hi All,

I'm extending offers for two, 2-unit properties as "buy and holds" with a lot of upsides, but unfortunately I can't have both so I have favored price-points identified. They are both A properties, but one has a ~10% Cap rate w/ a lower appreciation potential and the other is a ~8% Cap w/ a much higher appreciation potential. To compound the issue, the ~8% Cap rate has current long-term renters, but the ~10% Cap rate has one long-term renter and the other unit was previously owner occupied so my calculations are based on a very conservative average of comps. Both are in great areas as indicated by the "A", but the ~8% Cap property has the most traffic and comparably highest caliber of tenants. 

My question is:

Is the higher Cap rate w/ lower appreciation potential favorable for a long-term purchase (>10 years) or is the lower Cap w/ the higher appreciation potential and current occupancy a better bet?

My portfolio and strategy are buy-hold income generators and there is no foreseeable scenario where I would have to sell within 10 years. 

I welcome input from the BP community.