Updated about 7 years ago on . Most recent reply
What does a Cap Rate really mean?
I have been thinking a lot about Cap rates lately and what they really signal. I know that higher cap rates mean more ROI cash on cash and contracting Cap rates mean less of a return. That being said wouldn't shrinking cap rates indicate a coming upward shift in rents? If Cap rates are shrinking because the cost of acquisition is going up shouldn't that lead to higher rents and if that were the case wouldn't shrinking cap rates be a potential sign to buy? Maybe I'm looking at it incorrectly but I would like to know what others with more experience than I have think about all of this.