Are Triplex buildings valued by CAP rate?
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[{"id": "fuqdj1z", "text": "I mean... why not? You\u2019ll still have a net operating income so you can extrapolate a cap based on that.", "replies": [{"id": "fuuo4vb", "text": "Where would you get reliable cap rate comps?", "replies": [], "depth": 2}], "depth": 1}, {"id": "fuqecyt", "text": "That can range from a duplex, which has two dwellings within a single building, to **homes** or small apartment buildings with up to four units.\n\nCap rate is used to see payback return on all investment properties.", "replies": [{"id": "fuuo8c2", "text": "&gt;Cap rate is used to see payback return on all investment properties.\n\nCap rates do not measure \"return\".  They are used to value NOI.", "replies": [{"id": "fuxydz2", "text": "I saw this got downvoted, but in my experience it's correct.  Cap rates fall out; IRR is targeted.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fuqk45w", "text": "No anything less then 5 units is valued only on comps. People may wrongly use a cap rate as an illustrative metric. But the income is not capitalized. Increasing income will not increase the value of the home.", "replies": [], "depth": 1}, {"id": "fuqro34", "text": "Not really, and if they are they should command a worse cap rate than comparable stabilized institutional grade assets in the same submarket.", "replies": [{"id": "fur1ch5", "text": "Shut up you don\u2019t know what ur talking about", "replies": [{"id": "fur6tqu", "text": "Lol dude stop sending me direct messages and following my comments", "replies": [{"id": "fur75o3", "text": "Bruh ur a bitch you can\u2019t address what i called u out on\ud83e\udd23", "replies": [{"id": "fur7zxj", "text": "Sounds like you need to grow up", "replies": [{"id": "fur81tr", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [{"id": "fusjrf8", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [{"id": "fut44kg", "text": "Lol you woke up mad\ud83d\ude02\nCalm down it\u2019s not that deep\n\nI\u2019m done responding to u", "replies": [{"id": "fut5fgi", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}, {"id": "fur98xb", "text": "Lemme see the view from ur place come on buddy\n[come on throw some more](https://imgur.com/gallery/b3sG8TV)", "replies": [{"id": "fur9bdg", "text": "Not gonna let you stalk me creeper", "replies": [{"id": "fura55q", "text": "Bruh you stalk me. And i called u out on ur fake diploma and you can\u2019t admit ur lying on the internet. \n\nAlso my view is better than ur view from ur duplex in Montgomery county\ud83d\ude02", "replies": [{"id": "fura94m", "text": "Yikes man, I must have really gotten under your skin", "replies": [{"id": "furhj79", "text": "Ur the one lying bout where you live and what school you went to. But then again ur just a guy on the internet who wants to feel good about living in Maryland\ud83d\udc38\u2615\ufe0f\n\nGood luck with ur real estate license tho\n\nI hope you sleep well tonight too \ud83d\ude0c", "replies": [{"id": "furig3o", "text": "Holy fuck this is cringe", "replies": [{"id": "furihyr", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f\n\nEdit: here\u2019s a W for disliking my snowflake", "replies": [{"id": "furk6wy", "text": "You\u2019re giving me another W?", "replies": [{"id": "furkc8y", "text": "Now ur being cringy", "replies": [{"id": "furm5li", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [], "depth": 15}], "depth": 14}], "depth": 13}], "depth": 12}, {"id": "furjf5t", "text": "You seem like a good person at the end of the day. I\u2019m glad you could feel good about yourself for once", "replies": [{"id": "furn4xc", "text": "\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [{"id": "furn7kn", "text": "I don\u2019t have the energy for the \u201ctwo\u201d of you goodnight", "replies": [{"id": "furoys6", "text": "Na let\u2019s see how much money your mommy gives you to gild comments since you said she gave you so much", "replies": [], "depth": 15}], "depth": 14}], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}, {"id": "furhu9h", "text": "Please jerk one out for me tonight tho\ud83e\udd75\n\nUr welcome for the W too i find it ironic giving it to u", "replies": [{"id": "furl00c", "text": "&gt; Ur welcome for the W too i find it ironic giving it to u\n\nYou know you\u2019re not the one who gilded him. Truly delusional, beyond pathetic.", "replies": [{"id": "furlbkc", "text": "Oh my you\u2019re giving urself awards now\ud83e\udd22\n\n\u2744\ufe0f\u2744\ufe0f\u2744\ufe0f", "replies": [{"id": "furlriu", "text": "r/quityourbullshit", "replies": [], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "furywas", "text": "Cap rates vary by property class and location, so sure. These types of properties probably are higher risk when it comes to rental income, and likely have higher maintenance and management costs for every dollar of income, but also if they are already condos then have more buyers and may be more liquid. They have different attributes, and institutional investors aren't interested in them.", "replies": [{"id": "fusit2n", "text": "Higher risk=higher cap rate\n\nAlso all of the listings listed show cap rates at full occupancy with no bad debt loss, turnover vacancy or market vacancy. No one would underwrite a deal with those assumptions so the cap rates here aren\u2019t even real.\n\n&gt; These types of properties probably are higher risk when it comes to rental income, and likely \nhave higher maintenance and management costs for every dollar of income, but also if they are already condos then have more buyers and may be more liquid.\n\nYes these properties are less efficient to manage. You need at least 100-150 unit to reach efficiency  with an on site building manager. Any apartment building can undergo a condo conversion, and I\u2019m not sure exactly what rights tenants have in LA for right of first refusal on their unit so I couldn\u2019t say if these buildings have an advantage in that process.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fury7i7", "text": "I see no reason why in practice this isn't possible, It it might not be typical. You should be able to use cap rate for a commercial property with only one tenant, why not residential with 3 or for that matter, individual homes?\n\nOne thing to consider is that the direct comparison approach is more reliable, especially because there is usually lots of comparables for residential. For situations where you are looking at income properties, there are typically less direct comparison comps, so cap rate makes things a bit more straightforward. The other thing is cap rate works on income, which is what commercial investors are interested in (residential might be more interested in other amenities)", "replies": [], "depth": 1}]