Cap Rate 101

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Spread your risk…Get some low caps and some high caps for income…Kind of like bonds

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If people have to look at cap rates then they shouldn’t be buying in the Bay Area… all real estate here gives you negative cap rates (except North Bay).

Cap rate doesn’t include mortgage cost…Pretty hard to go negative except maybe in London


My caps in Tahoe are 6-10%…appreciation is 5-10%…Can live on the cash flow…good for retirement. .Start selling or trading low caps with 1031s slowly heading into retirement .

Didn’t know that… in that case it’s a pretty useless number (to me at least). I’ve been investing in real estate all these years without knowing what it actually is!

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Cap rate = dividend, that is all !
Mortgage = margin money, that is excluded,
Home appreciation = stock growth.


Long term tax rate for dividend is 15%.
Net rental income is taxed at personal income tax.
For high income guys, dividend is preferred :smiley:

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Maybe but real RE income is tax sheltered, dividends are not. Besides renters don’t 1099 and many landlords get paid in cash…

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Only above board please.

Even above board most RE income is tax sheltered. …But in reality few landlords report their full income…In fact most RE investors pay no tax, look at Trump and he is audited every year…

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There is no such thing as a negative cap rate.