When an agent gives a range for an area's Cap Rate

[Cody Barrett]

Hey everyone. What do you guys do when an agent responds with a range of Cap Rates? Or does tell you something about the local market as an investor? I asked what the local cap rate is on similar buildings that recently sold. She said they are all over the place from 5 to 10%.. Which kind of puts me in a weird spot with trying to determine a starting point for an offer price based on the building's NOI. Still learning so I appreciate the feedback, hah!

Its an 8 unit building that I am checking out. He owns 2 right next to each other but they're being separately offered to buyers.  

Thanks,

Cody B 

[Jeff Greenberg]

@Cody Barrett that is a huge range in cap.  I would ask her what is why and what types of property they at the different caps.  I would also get a second and third opinion from other brokers.  You could easily have different caps in different areas, but within the same area, the same type of property in a similar condition, should be sold at a similar cap.  You can also ask what similar properties are trading (selling) per door.  This can help you compare this deal with other properties.  Brokers seem to like the per door sales comparison better as there is very little work involved with the calculation.