I am concerned about investor complacency. How to deal with rise prices, decreasing CAP rates?

[Ben Bakhshi]

Hi all,
When looking for cash-flow properties, the last 2 years have been wonderful. We have some properties in our portfolio that are making 20% per year, most around 15% per year, and some, in nicer areas around 10% per year. None of these required significant fix-up costs.

My hypothesis is that we are in such a unique circumstance with the real estate crash, and 20% returns cannot exist for the long run in the open market. (Private sales, or fixer uppers, may be taken advantage of by saavy investors).

When do you say to yourself:
1. The returns on investment for buying properties in my area are not sufficient for me to buy and hold?

Follow-up question:
2. Is there a "typical" CAP rate that every market re-calibrates to?
Tangential follow-up question:
3a, 3b. What are typical CAP rates for condos, SFHs, 2-4 unit multi-families, and larger multi-families? And how much does this vary based on your region? Is there an equilibrium?

4. What do you think is a sustainable return on investment on the open market in real estate?

For example, as far back as the 90s in California, I remember people would buy real estate so long as rents paid down your expenses, ie. at the end of the year you made 0, but you were still satisfied.