At What Cap Rate % Does A Property Become A "No Brainer"?

[Keith Roberts]

Greetings Everyone.

Curious to get some seasoned opinions on at what Cap Rate % makes you pull the trigger on a deal. I've had some people tell me anything over 8% is a good deal (to me a good deal means positive monthly cash flow). At the same time I can pull up 5-7 listings in my area which, if the provided NOI expenses are accurate, have a Cap Rate of over 15% yet have over 100 days on the market.

So what do you guys and gals think? 

[Immanuel Sibero]

Cap rate is generally a measure of risk and how much properties are in demand in a certain market. The more desirable the properties are in a certain market the lower the cap rate for that market. Your investment strategy determines whether you invest in low cap rate areas or higher cap rate areas. To say that there is a certain cap rate % where a property becomes a no-brainer does not make any sense. Many investors use IRR to evaluate a property, for example, by setting a minimum of 20% IRR. There are properties with 15% "cap" as well as properties with 4% "cap" all giving you >20% IRR. Which one is a no-brainer?

Cheers... Immanuel