Cap Rates Are Fake (mostly)

Cap rates… the be all, end all of commercial real estate analysis. This simple little calculation is considered oh so important.

Net Operating Income / Total Price of Property = Cash Flow

Well, unfortunately, cap rates are fake. OK fakeish. For internal analysis, sure, they’re helpful. But for comparing and analyzing different commercial properties, there’s just too much blurriness for them to give a great picture of what’s going on. In this video, we explain why cap rates are, for the most part, fake.

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Also, check out Andrew’s Substack: https://andrewsyrios.substack.com/