Finding/Calculating CAP Rates in Different Areas

[Wendell Butler]

Hello everyone!

How do you all calculate the CAP rates for different areas? Are their specific websites you use? Or connections you have? I am trying to run numbers for a commercial 7-8 unit property BRRRR and I have asked around to get an estimated CAP rate of the area, but it's hard to find a specific number to use for calculations.

Let me know your thoughts!

[Barry Ruby]

Hi Wendell, cap rates are influenced by geographical area, however they are in my experience deal specific. YOUR acquisition Cap Rate is the one that meets the target UN-LEVERED cash on cash return you set for yourself. If you intend it to be "real", it needs to meet cap rates that are currently happening the market area of a given property. 

For Instance, if your target cap rate is 8% in markets like Hawaii or California (where they are in the low single digits) you'd be well advised to spend your time banging your head against one of the walls of the subject property than expecting to actually find something that meets your target rate.