So in Part 1 I poked holes in the old axiom that the cap rate is a return of investment. In Part 2 I mathematically proved that the difference between two cap rates for the same property (or extremely comparable properties) is appreciation... yet we also went on to show that the timing.
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The Biggest Cap Rate Misconception On The Planet! Part 2 of 3
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Posted by John Simpson
I'm going to step up on my soapbox for the concept of appreciation being built into cap rates. Can someone hand me a microphone... please? Appreciation Explains Cap Rate Differences... Not! It's taught in Appraisal 101 that the difference in cap rates is appreciation. Here's a good quote I found to support that.
Read moreThe cap rate only.
The Biggest Cap Rate Misconception On The Planet! Part 1 of 3
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Posted by John Simpson
What Space Has Been Charted As you may know, I've written a lot about cap rates. Permit me to summarize the key points.
Read more- Variability in cap rates - What Marina Cap Rates Are You Seeing?
- Cap Rate changes in recessions - Why Cap Rates Go Up in Recessions .