my commercial agent: "over 8% CAP does not exist"

[George P.]

i have been working with an agent that has been working on commercial RE only for the past 10 yrs. he is an older guy, around 76. we looked at a few properties together and when i told him what i was looking for "around 10% cap", he said:

"Let me be honest with you. There are no properties ever that will give you more than 6-8% max. in my 10 yrs of CRE, i have never seen more than 8%. let's face it, if they are making 10%, why would they sell?

you dont get 10% cap. you get a 6 or 8% and you work at it to get it to 10%".

I thought this made sense while talking to him, but everyone on BP looks for deals AND finds deals that are at least 10% cap rate.

thoughts?

[Account Closed]

No offense intended towards the agent, but he only knows what he knows and has only has his experience to rely on. Which isn't necessarily what you should rely on. Since purchase price is a huge variable, I'd not listen to anyone who says they know what does and doesn't exist.

If I listened to people that like, and there are many in the service sector of REI, I'd never have done a deal. You'll never get that property for X, you can't discount that lien, max rents for that property are X, the owner will never sell, the property is condemned, the owner is in jail, there are no buyers for property like that. Yawn. None of these things are true until they are true for you. And even then, it could change tomorrow.

Honestly, IMO agents are the worst in this regard. They really think they are setting you straight and managing your expectations. But in actuality, they can only get you the deals they think are possible. If you're good with his expectations, they you two are a perfect match. If not, just make the offers you want to make and let him keep his ideas to himself.