I currently have one rental property and am looking into purchasing a second one. As I drill down into this industry more questions arise and I am curious what would be considered a good capitalization rate.
Thanks, I will look into it. Which is a better measure of ROI? Cap rate or cash on cash return?
so Chris, the correct answer is nine. Thanks!
So many factors at play here. Lower cap rates indicate safer investments with lower potential returns while higher cap rates often carry more risk.
The easiest way to determine a good cap rate is to have a realtor pull up rental sales in the market. If you can get rental rates and sales prices, you can then figure out a typical market cap rate. Then figure out if your investment is better or worse than the market at large.
Thank you Patrick and Seth for your feedback. It was helpful
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