The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: The Duke of URL© who wrote (6443)	10/30/2002 11:55:47 AM
From: Elroy Jetson	Read Replies (1) of 306849

I am not familiar with your definition of Cap Rate. I don't believe it is widely used. The Cap Rate I am familiar with is Net Operating Income divided by Purchase Price. This is the same as an initial rate of return, not a projected future rate of return. invest-2win.com allstats.com investorwords.com jurock.mybc.com ccim.com This last link from the CCIM (Certified Commercial Investment Member) shows large multi-family being sold (2nd Quarter 2002) at an 8.5% Cap Rate, 8% now. The easy way to get these returns is buying a REIT. An 8.25% Cap Rate on a small property is suspect as these have been bid up to a level where Cap Rates are typically 2% or less (a bad value). An 8.25% Cap Rate on a smaller property is probably an older property with significant management problems.

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