Focus on cash on cash return and IRR, not cap rates

[Beau Beery]

In this video I run through a spreadsheet proving why most Elite Investors think cap rates alone are worthless in determining whether to pursue a multifamily real estate purchase. As a commercial broker I get asked all the time on new multifamily listings "what's the cap rate" and that's all that's asked. Cap rates are extremely limited in determining the long term value of an asset because they ignore a number of factors, including debt and future value.

Link to video on YouTube is:  

https://www.youtube.com/watch?v=quQYPKEbSNo

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