They both play a crucial role in determining a property's value, but understanding the nuances between them is essential for making informed investment decisions.Think of a cap rate as a shortcut for property valuation.

Also unsure if you can build sweat equity in a townhome or if there’s more of a “cap” to what value you can add due to the neighboring units, if that makes sense? 

   =)  there were rehab loans available for a while for 0% interest, which was cool... but there was a cap on the number of properties you could own and be eligible for, which i was above.so we need some kind of catalyst or incentive. 

I frequently see investors get rigid and want too high a cap rate with the starting 45 day ID period for 1031 then at last second they panic and have to get in something.

As a Cap Rate is indicative of the risk involved in owning the property, you want to focus on doing things that make your investment less risky if a bank ever had to take over.You can make your investment less risky by doing some of the following things:- Convert all month-to-month tenants to annual leases- Implement strict minimum rental criteria- Add security cameras- Make large capital and preventative improvements (fix drainage issues, install water pressure regulators, replace old HVACs...you get the picture)- Essentially, prove with action that you are caring for the property on a long-term basisThe only way this is effective is if you document everything you are doing as well.

@Carlos Ptriawan @Jay Hinrichs Residential ground leases in Maryland (Baltimore City mainly but also surrounding counties) are typically 99-year leases renewable in perpetuity, meaning as long as the rent continues to be paid the lease is automatically renewed for 99 more.No pay or slow pay and you can loose your leasehold property.You can "redeem" the ground (well except for "irredeemable" ground rents, but those are quite rare and another story) by buying out the owner of the fee simple interest a cap rate formula based upon the date the original lease was created.

While a cap rate will give you a general idea of what the market is willing to pay, that a) doesn't make it necessarily worth that to you and b) doesn't mean the seller will accept that price.But the bigger piece is knowing what your return threshold is.  

It has been recently introduced and is supposed to put a cap on the cost to install utility hook ups for new construction and ban hedge funds and corporate entities from buying single family homes in California):SB 1210"This bill would, for new housing construction, prohibit a connection, capacity, or other point of connection charge from a public utility, as defined, or a special district, as defined, for electrical, gas, sewer, or water service from exceeding 1% of the reported building permit value of that housing unit.

It’s not so much a cap but by the time lenders add in all there fees, origination fees, doc fees, etc it ends up feeling like a 20% down payment to close instead of 10%.

(Been recently looking in Clear Creek County for a client, myself.)Clear Creek has a cap on non-owner occupied short term rentals.