Help understanding (maybe) CAP/NOI/PRICE

[James Saturley]

Hello BP. I'm not sure if I'm having a difficult time understanding the relationship between Cap rates, NOI, and Price. Maybe I'm not, but the prices that multi-family units are selling for in Tampa, don't make sense.

Duplex sold for $435K, NOI was $24,639, and the cap rate here (I'm told) is 8% (GROSS was $42,750)

Fourplex sold for $588K, NOI was $32,315, CAP is 8% (GROSS was $50,103)

So, if the price = NOI/CAP, then the first should have sold for $307K, The second $403K, am I right?

The prices they sold for don't add up even in the BP calculator, so why are people buying them?  Am I missing something basic?

Thanks,

Jim

[Michael Le]

Properties below 5-units are considered residential (vs commercial) and are valued based on comps. Trying to figure out the cap rate on them won't really give you much because it won't really matter.