Comments on: Love High Cap Rates? Me Too — Ever Ask Yourself WHY They’re High?

by: BawldGuy

Tue, 04 Mar 2008 22:59:09 +0000

Rense — Don’t know — why don’t you tell me?

by: Renese

Tue, 04 Mar 2008 21:11:42 +0000

what would be a good average cap rate for Class A office space in Fort Lauderdale area?

by: On Cap Rates and Capital Growth | The Wealth Building Guy

Tue, 29 Jan 2008 12:53:12 +0000

[…] As Jeff Brown said this week: If growth is your primary goal, acquiring double digit cap rate properties will almost always have the following two consequences: […]

by: BawldGuy

Thu, 24 Jan 2008 17:09:50 +0000

Chris — After this comment I’d be a cad if I didn’t mail you a promotional fee.

The answer will show up today in a post. This is too good to pass up. Thanks!

by: Christopher Smith

Thu, 24 Jan 2008 16:18:15 +0000

Jeff your readers are gonna think I’m paying you a promotional fee…

OK agree with most of what you’ve written so I’ll ignore all of that stuff and focus on our “degree” of disagreement, as you artfully put it. So here’s my question for you: If you had a $50 million dollar bill to invest would you buy a mansion in Beverly Hills or would you buy a block of duplexes in blue collar East LA?

Beverly Hills is high demand. Having Steven Spielberg and Michael Eisner as your neighbors would be pretty cool. High demand areas will always have a higher value than low demand areas, but it doesn’t follow that high demand areas will always appreciate faster. If this were the case then the wealthy zip codes would steadily pull away from the poorer ones ad infinitum, but we know this isn’t the way that laws of economics work.

I can’t answer my own hypothetical question because I don’t know Los Angeles, but I do know that I wouldn’t automatically gravitate towards the high demand area with the expectation that this would help me in the capital appreciation category.

by: BawldGuy

Thu, 24 Jan 2008 04:26:09 +0000

Phoenix — you said it. Cap rates are like almost seductive for some, hypnotic for others. Either way the results can be a sad surprise.

by: BawldGuy

Thu, 24 Jan 2008 04:22:37 +0000

David — ‘…four legs and barks.’ Why can’t I think of quotes like that?

Thanks

by: Phoenix az real estate

Thu, 24 Jan 2008 04:00:13 +0000

I couldn’t agree more with you, David. You have to know what you’re doing if you go by cap rates.

by: David Stejkowski

Thu, 24 Jan 2008 03:41:30 +0000

Here I go preaching to the choir. Cap rates are but a tool, and a very very dangerous one in the hands of the amateur.

I don’t care how great the cap rate is if the property has four legs and barks.

How many times have we heard someone say, “But I can get this at an 11 and sell at a 9!” And you know inevitably what happens. El-tanko. Now that’s not saying you can’ get a bargain or two out there, IF you know what you are doing!

Another homer, Jeff.