Cap Rate vs Mortgage interest rate

[Sartaj G.]

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.