New Low Cap Rates = Lower Return on Money; Should We Cash Out into Long-term Stocks?

[Tony T.]

Hi there, I have recently discovered that the cap rates in my area have gone from 8.5% down to about 5.5% in the past few years! That makes my (debt-free) property worth a lot more.

BUT if cap rates are at 5.5%, that means I'm getting only a 5.5% return on my money/investment! That's low in my opinion! But I realize it's not including yearly appreciation (inflation). So, if inflation got around 5%, then investing in a 10% return stocks would be the same return as rentals except without the time required to manage those rentals.

Since the stock market does around 10% in the long term, I'm considering selling.

Does anyone have any input on such a major shift in investing? It would be an incredibly big step since I have been in multifamily for 25 years. Thanks for any input.