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Updated almost 7 years ago,

User Stats

3
Posts
3
Votes
Mark J Donahue
  • Naperville, IL
3
Votes |
3
Posts

Cap Rate when buying

Mark J Donahue
  • Naperville, IL
Posted

To all the real estate experts out there i need a simple answer that is driving me crazy. Doing research says it is optimal to buy at high cap and sell at low cap. I cant see it, but know it is true.

400k purchase price and 60k NOI Cap rate 6.6

400k purchase price and 50k NOI

Cap rate 8.0

Why do i want to buy a property with 8.0 Cap rate with 50k N0I vs 60K NOI at cap of 6.6

Thanks, I know this question has probably been asked and answered thousands of times.

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