Sell or Keep using Cap Rate

[Federico Cantero]

Good morning. This is a question that I constantly make myself and probably will be a good one to know other people mindsets over when to sell or keep a property using Cap Rate as a guide. 

So, please let me know, in your market area, what is the current CAP RATE for lest say Single Home Rental and at what CAP RATE you would consider selling the property and why?

In my case, CAP RATE average in my area is 8.2% and I would consider selling the property if appreciation pushes my CAP RAT to 5%. This will signal me that my money is better off being re-invested.

[Immanuel Sibero]

@Federico Cantero

Cap rate is not relevant in determining the value (sales price) of a Single Home Rental. Along with several other metrics, cap rate is normally used in determining the value (sales price) of 5-unit or more properties.

You should use recent sales comparables in the area to determine the value (sales price) of a single family home.

Cheers... Immanuel