Selling Price For Cap Rate 8.00% Net $50K / Yr.

Comments(4)

• 
  woodsong26th August, 2005

  Quote:
  On 2005-08-26 17:30, mmlook4 wrote:
  Hi,
  
  Please help to find out the reasonable selling price of the following property:
  
  Cap Rate: 8.00%
  Net Operating Income: $100,000 / per year
  Lot Size: 10 acres
  Occupancy rate: 40%
  Year built: 1968
  
  Also, what is the Cap Rate Means ???
  
  Your professional advice is much appreciated, thank you.
  
  wonder...
  
  
  
  
  
  If the NOI is $100K and it is an 8% cap, sales price is $1,250,000. Cap rate refers to rate of return. in this instance, 8%. If the area is appreciating, in a good area, or has a quality credit rated tenant, 8% can be good. If it is arun of the mill property in not so good area, 10% or better would be needed. No one can tell you what you should want for a cap rate...it is an individual decision based on what kind of return on investment you want. The lower the cap rate, the less the return. The higher the cap rate, the better the return.

• 
  mmlook427th August, 2005

  Quote:
  On 2005-08-26 17:47, woodsong wrote:
  
  
  
  Quote:
  On 2005-08-26 17:30, mmlook4 wrote:
  Hi,
  
  Please help to find out the reasonable selling price of the following property:
  
  Cap Rate: 8.00%
  Net Operating Income: $100,000 / per year
  Lot Size: 10 acres
  Occupancy rate: 40%
  Year built: 1968
  
  Also, what is the Cap Rate Means ???
  
  Your professional advice is much appreciated, thank you.
  
  wonder...
  
  
  
  
  
  If the NOI is $100K and it is an 8% cap, sales price is $1,250,000. Cap rate refers to rate of return. in this instance, 8%. If the area is appreciating, in a good area, or has a quality credit rated tenant, 8% can be good. If it is arun of the mill property in not so good area, 10% or better would be needed. No one can tell you what you should want for a cap rate...it is an individual decision based on what kind of return on investment you want. The lower the cap rate, the less the return. The higher the cap rate, the better the return.
  
  
  -----------------
  
  THANK YOU SO MUCH FOR REPLYING, APPRECIATED

• 
  groverm27th August, 2005

  I started last year. The most important thing to remember is to have a great property manager. Equally important is to make sure to visit the property and do your due diligence before buying. Buying something out of state can work great or be your worst nightmare, if your not prepared. Thankfully, I have been extremely lucky.

• 
  ew8627th August, 2005

  Yes, I have properties out of state. They are ok. My main reasons to do that are diversification and better cash flow and potentiial appreciation. You have to weight your gain vs your loss. Your gain might be better cash flow/vacancy/appreciation/return. Your loss might be less control,harder to monitor, more stress, etc.[ Edited by ew86 on Date 08/27/2005 ]