What Cap. rate will be profitable for investment?
3,471I am an Investor want to know that based on cap. rate you can decide to buy property?
2 answer(s)
About 8 years ago
purchasing investment property based only on cap rate is not a good way to value a property. A Cap Rate is only a one year snap shot of what the property "should" do the following year. It does Not mean that is the level of return you will get on your investment. When looking at properties the higher the cap rate the higher the potential return and the higher the risk. Cap rates will also range based on the asset type and call you are looking at purchasing. So you can make money with a property purchased at a 4% cap rate and lose money on a property purchased with a 10% cap rate. It all comes down to the asset purchased. Don't put much weight into a cap rate.
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DislikeAbout 8 years ago
Great question! A rate of 8-12% is what most consider to be acceptable. I strive for 10% myself for any real estate investment. I will attach an article that makes sense of things. I hope this helps, thanks for posting!
source:
https://www.biggerpockets.com/blogs/258/blog_posts/15872-what-is-a-good-cap-rate-what-makes-a-good-return-on-investment
https://www.biggerpockets.com/blogs/258/blog_posts/15872-what-is-a-good-cap-rate-what-makes-a-good-return-on-investment
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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