General CAP rates in the USA for the last few years?

[Rico Valez]

Hey Everyone,

Just curious, what are the cap rates like in the USA during the whole meltdown for investment properties. Lets say 6-30 unit apartment buildings. Doesn't matter the area, just wondering to compare with the local cap rates here in Ottawa.

Thanks,

[J Scott]

It's just not possible to give an average. It will depend on things like:

- Location
- Class of property
- Condition of property
- Circumstances of owner
- Retail or distressed
- Occupancy rate
- Etc.

There are building in California where, even during the worst of the downturn, were seeing cap rates in the 5-6% rate. And then there are probably buildings in the heart of some bad downtown areas where you'll see cap rates in the 12-15% range, and perhaps even higher.

There's really no average that would be at all meaningful...

[Jeremy Cyrier]

Check out past annual issue of IRR.com's market guide. In there, you'll find an index of cap rates by market and asset type.

[Bill Gulley]

And while we all know what you mean, and what might be posted at the site mentioned, keep in mind that capitalization rates are derived from the alternative investments given similar risks and evaluating the opportunity costs of your selected investment.

An appraiser will assign a cap rate that is customary for a similar investment, considering risk, liquidity, location, management effort and other issues. Which does not really mean the average cap rate realized from say 4 other similar properties in an area.

If investors could buy gold in a liquid and performing market with a 15% cap rate, or get 10% on CDs, those alternatives will affect rates demanded from other investments like RE, it's moving target. :)