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Updated 7 months ago on . Most recent reply
Cap Rate vs Mortgage interest rate
Hi all,
I am looking at some CRE and seeing that the Cap Rate in the range of 5-7%. Mortgage interest rates are around 7%. In this environment how are people doing the deals? Is it working only for cash buyers? I am willing to pay 20-30% down but borrowing at 7% to buy a property with 6% Cap rate does not sounds right. I was looking at retail properties. Am I missing something? Thanks.
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Robin Simon
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Robin Simon
#3 Private Lending & Conventional Mortgage Advice Contributor
Pro Member
#3 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
It is certainly a tough environment for deals right now - but also remember that cap rate is on the value and interest rate is on the debt balance so its not an immediate 1:1