12% Cap Rates, Great Tenants, Great Location Vs. Opportunity

Posted from my blog at www.headsoratale.com. This post is pursuant a comment dialogue I had over at a BiggerPockets.com blog post written by Khary Reynolds on Real Estate Syndication. This conversation is also posted on the BiggerPockets.com Forum here.

I'm going to post my comment conversation here and the dilemma that stemmed from it. I'm posting this here in the hopes that you will all share your advice and opinions w/ me w/ regards to this major decision in my life. So here goes nothing:

I began asking Khary how he built an investor group to back him on deals.

Jeff (another reader) responds:

"I think if you’re able to find superbly high quality buildings, with golden tenants, in equal quality locations at cap rates of 12%, you’ll have no problem whatsoever of finding investors.":

My response to Jeff, and my dilemma:

"Your definitely right on that Jeff. I do find myself w/ another dilemma…

Mind you, I am only 21 so things can change, but I do have a great job + opportunity to work at the highest volume Commercial RE brokerage in my ~120k population college town + surrounding city. My boss wants me to commit to 3 years after graduation (2011-2014). Here’s my dilemma – the cap rates in my city average 5% because of zoning restrictions that do not allow ANY new buildout whatsoever. There is no geographic (space) city expansion. As such, property values don’t fluctuate as widely as other areas (supply is limited, demand grows) but because there is less risk, the cap on buildings does not get as high as in other areas. My goal has always been to learn through brokerage and PM while building an investor group and then to syndicate RE deals starting as soon as is possible.

Knowing that the cap in my town will VERY rarely go above a 5-8% range, do you think it will be difficult/nigh on impossible to find investors?

Do you think that this city will be a “bubble” (That whatever progress I make building an investor group and learning brokerage and PM will not translate to a bigger city because of this cities unique RE characteristics)?

Do you think staying in this smallish city to gain experience at this high volume CRE brokerage is inconsistent w/ my goal of syndicating deals?"

So there it is. Any advice, wisdom, help, knowledge would be appreciated. If you could share this w/ people that may have experience w/ circumstance like this as well I would be extremely appreciative!!!!