Is Double Digit Cap Rate Possible In CA
Hi All,
I moved to California (Sacramento) 5 days ago, and have been looking at apartment complexes for sale in Sacramento and El Dorado counties. The cap rates I am finding are around 5%. William Nickerson and John Reed, both Californians, recommend buying at double digit cap rate (10%).
I am interested in knowing if anybody on this forum ever encountered, in the 21st century, a double digit cap rate in California (whether or not listed with a 21st Century real estate brokerage firm), or are those now classified in the UFO category ?
I am also interested in hearing opinions as to whether it's better to own a local 5% cap rate (where I can keep an eye on it, the other eye looking at the my dwindeling cash flushing down the toilets of all units in the complex), or remotely own a double digit cap rate building in Oklahoma and entrust it to a property management company.
[addsig]
achab
Welcome to California !
To sum it up ... 10% cap rate will be hard to find.
There are still good deals out there to buy ... just keep looking. Look in Sacramento Bee newspaper or their online classifieds under real estate http://www.sacbee.com
Also any properties listed or FBSO look for properties that you can improve:
1) Rents under market that you will raise once you are the owner
2) California has very high rents. Get yourself familiar with the rental income for the areas so you will immediately recognize when the rents are too low.
3) I do see when sellers have owned the properties for several years ... some have not raised the rents for 2-3+ years. They mainly like the tenants or are afraid that if they raise the rents the tenants will move.
4) Add laundromat for extra income
5) Expand your investment interest to other types of rental income properties.
6) Public access MLS for buyers to use to search activie listings is www.metrolist.net. Then you can search for properties and call the listing agent direct.
Cheryl Lopez
[ Edited by cheryllopez on Date 09/14/2004 ]
[ Edited by cheryllopez on Date 09/14/2004 ][ Edited by cheryllopez on Date 09/14/2004 ]