Do Investors Buy/Sell SFR using cap rates or comps?

[Bradley Raynor]

Hi all,

I was curious on everybody's perspective whether buying or selling single family rentals use a Cap Rate valuation, or a more traditional $/sqft with comps.  On on hand it seems $/sqft makes sense, but if it's strictly a rental and has a long track record, I can see Cap Rate making sense too.  Thank you in advance for all input on this.

Brad

[Tyler Bains]

I would never look at Cap rate for a SFR rental or homestead. You look at market comps because that is what an appraiser will look at. CoC ROI is what I want to know when analyzing a property for a client but market comps would be the way to determine an offer price.