8% cap rate in Los Angeles? wtf?

[Ross Kane]

hi guys

I am new to real estate market. I am looking at this property

12906 venice blvd 90066

price is $1495000

As you can see in the listing, they claim this property is rented at $10,000 a month

$120,000 / 1495000 = 8%

any idiot (even me) knows in Los Angeles you would be lucky to get a cap rate of 4%

what's going on here? is this a fake listing? why is nobody buying this property?

[Charles Carillo]

@Ross Kane

The cap rate is calculated using the NOI, not the gross rent. The property expenses are all left out here. Maybe once the actual property expenses are added to the equation, you will see a more realistic cap rate.

[Tim Ryan]

Likely has about 40% (0r more) in expenses. So the NOI around $72k = a 4.8% cap rate. So, you are correct Ross to question this. Just keep in mind NOI is after expenses and before mortgages.