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Updated over 6 years ago on . Most recent reply

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483
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Sanjeev Advani
  • Investor
  • Bakersfield, CA
234
Votes |
483
Posts

Who's Buying 4-5 Cap Properties?

Sanjeev Advani
  • Investor
  • Bakersfield, CA
Posted

My question is simple: Who is buying these 4 cap and 5 cap properties?  I know its someone because they are being sold... quickly.  But who? 

Most Popular Reply

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17,459
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Russell Brazil
  • Real Estate Agent
  • Washington, D.C.
30,145
Votes |
17,459
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Russell Brazil
  • Real Estate Agent
  • Washington, D.C.
ModeratorReplied

Me.

Some people see cap rates as reflective of the return of the property, and that is simply not the case. Does a 4% cap rate return less than a 10% cap rate? Not typically actually. Cap rate is a reflection of risk, as well as often the market pricing in rent growth and appreciation of the asset. Lower cap rates are indicative of a lower risk asset and higher cap rates are indicative of higher risk assets.

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