True Cap Rates - Why Big Inconsistencies

[Rick Bevilacqua]

I am curious as to why there is such a large disparity in how a true cap rate is determined? Why there isn’t an agreed upon method of arriving at true cap rate before listing a property for sale.

It seems that most sellers and many agents will list a property and leave out expenses like vacancy rate, repair set aside, management fees allowance and Capex set aside, etc.

What is everyone’s feelings on using these other “expenses” when calculating a true Cap rate for a deal?

[Bo Smith]

Because there's no enforcement mechanism - listing agents get paid to make deals look attractive, not accurate. Most sellers don't even know their real expenses anyway. I always add 15% buffer to any pro forma for the stuff they conveniently forgot. What's the wildest expense you've seen left out?