Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Real Estate Deal Analysis & Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 5 years ago on . Most recent reply

User Stats

6
Posts
1
Votes
Dimitry Peters
1
Votes |
6
Posts

Cap rate how important is it to you and how do you use it?

Dimitry Peters
Posted

What cap rate do you look for when analysing a property? Do you stick by the same percent for each investment? Is there a "best" cap rate?

Most Popular Reply

User Stats

6,017
Posts
5,058
Votes
John Warren
  • Real Estate Broker
  • 3412 S. Harlem Avenue Riverside, IL 60546
5,058
Votes |
6,017
Posts
John Warren
  • Real Estate Broker
  • 3412 S. Harlem Avenue Riverside, IL 60546
Replied

@Dimitry Peters I am less concerned about what the cap rate is when I buy the property, and more concerned with what the cap rate will be when I am operating the property. Typically, I buy things that are value add so the cap rates are very low (3, 4 or 5 even). Once I take over, I get them operating at a 10 cap or even higher. 

In the Chicago burbs where I invest, it seems that the going cap rate for "stabilized" multifamily is anywhere from 4 cap in the A areas to 6-7 cap in the C areas. Even then, when you dig into the number a lot of the deals listed by local commercial brokers are actually probably negative cap rates. 

  • John Warren
  • Loading replies...