Quote:
Originally Posted by Eric Coffey
Well, no offense but my statement was targeted at the OP, who stated he was looking into his first commercial property/investment. I was just trying to be a bit diplomatic in response (counter) to your completely incorrect statement. 
Any "investor" that bases an acquisition decision solely on cap rate is naive, and bound to get burnt. Cap rate is but one metric (that can be easily manipulated), and depending on one's strategy can be completely irrelevant.
It can also be proportional to the risk involved in many instances (high cap = high risk, low cap = low risk). Better to look at the complete picture, to include actual YoY NOI, CoC, vacancy rate, deferred maintenance, management performance/issues, etc.
Sorry if that is a "Captain Obvious" response, but it does seem appropriate here.
Yet another incorrect blanket statement. Lots of reasons for under-performance, and cap can fluctuate dramatically, depending on several factors.
Not to mention, caps are at an all-time-low across all asset classes these days, primarily due to higher property values and the current (low interest rate) financial environment.
By all means though, please send me any/all OM's for value-add properties with double-digit caps that can be taken down on the cheap, lol... |
You are a blowhard. blah blah blah.
You have argued that the deal "might be" an okay deal for an undercapitalized first time RE investor considering a mixed use income producing asset in coastal california and that we are presumptive by issuing cautionary "blanket statements" about aggressively marketed properties for sale with a prospectus indicating a cap of 2%.
Why don't you post one of those beautiful, value add, multi-anythings, marketed as a 2% cap,
in which the value was not in the dirt, that closed in 2017, 2018 or 2019.
Please don't encourage this fellow Pelican to hurt himself and his family. People have to live with their mistakes long after you earn your commission.
DL