Property Expenses & Cap Rates

[Sheldon Peart]

Hello Everyone,

I have two quick questions. We are currently looking for our first real estate property; multi-family to be exact, and have some questions regarding expenses and cap rates:

1. Operating expenses - I have requested this from multiple properties in order to try and place a value on the asset, but I am just getting a very simple spreadsheet with rents and expenses. I understand this is a great way to track investments, a spreadsheet is how I track all our other investments also. My issue is, are the numbers real? So my question to BP members is: is there any type of verifiable document for rent roll and operating expenses other then a spreadsheet? I understand sellers will conveniently show low expenses, I look at expenses with a critical eye and not naivety.

2. Cap Rates - how do I find out cap rates? I know the cap rate is an outcome of the NOI/Purchase price, but what if you are trying to determine the purchase price and only have the NOI variable, how do I find the Cap Rate? My logic is telling me that either I call brokers and property managers, or I determine what cap rate I am comfortable purchasing at and find properties that fit those parameters.

Thank you for your time and look forward to the advice, 

Sheldon