Residential Real Estate Broker · East Orange, NJ · Member since 2014 · 297 posts · 26 votes
I am looking for the average cap rate for Essex County. If someone has worked in this area please let me know. If anyone has an idea of where to get that information I would appreciate that as well.
Investor · Hudson County, NJ · Member since 2015 · 15 posts · 12 votes
10y
County wide numbers are not going to be accurate due to the fact that there are such differences between the towns...ie, you're going to find higher cap rate in East Orange than you would in Montclair due to risk. Differences are substantial, too. You could be looking at a 10-12% cap in east orange versus a 4-5% cap in millburn. Really depends on where you are talking about.
I am looking for the average cap rate for Essex County. If someone has worked in this area please let me know. If anyone has an idea of where to get that information I would appreciate that as well.
Then a cap rate is not needed. Cap rates have most use when a property is encumbered by above/below market leases. You would pay more for a property that had a credit tenant that had a long term lease for above market rents than you would for the identical property next door that has a long term lease at below market rents. Exact same properties, exact same expenses but drastically different NOI's. It is the market cap rate from other sales that you would use to determine the value of the NOI, not the building.
Youi best bet is to find comparable sales to determine value. Be sure that they are not encumbered by long term below/above market rents. If you can't find good comps you could use GRM from similar building sales.
Investor · Hudson County, NJ · Member since 2015 · 15 posts · 12 votes
10y
County wide numbers are not going to be accurate due to the fact that there are such differences between the towns...ie, you're going to find higher cap rate in East Orange than you would in Montclair due to risk. Differences are substantial, too. You could be looking at a 10-12% cap in east orange versus a 4-5% cap in millburn. Really depends on where you are talking about.