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Updated about 6 years ago on . Most recent reply

Andy Sirulnik's profile image
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Andy Sirulnik
  • from Northampton, Massachusetts
  • Member since Jun 29, 2017
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Andy Sirulnik
  • from Northampton, Massachusetts
  • Member since Jun 29, 2017
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Andy Sirulnik
  • Northampton, MA
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Multi-Family and Apartment Investing

Very low cap rate vs high cash-on-cash

Andy Sirulnik
  • Northampton, MA
Posted

Newish investor.  I'm in an area of small New England towns, with a few small city areas steadily attracting young professionals and becoming trendy.  I'm looking at a three-family on a leafy street with with 80% financing, my cash-on-cash return would be 10%-15%.  But the cap rate is only around 2%.  Am I crazy, stupid, some combination thereof, or just missing something?

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Immanuel Sibero's profile image
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Immanuel Sibero
  • from Carrollton, TX
  • Member since May 26, 2015
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Immanuel Sibero
  • from Carrollton, TX
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  • Carrollton, TX
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Immanuel Sibero
  • Carrollton, TX
Replied

Cap Rate never includes debt service because debt service is never an expense, nor is it an "operating" expense, but I digress...

Cheers... Immanuel

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