How often are cap rates for properties and buildings updated?
It seems like cap rates are generally updated on a Quarterly basis and calculated when a sale occurs. This seems a bit odd to me as cap rates are dynamic i.e there are several factors that affect cap rates that are changing quite frequently. For example, occupancy, 10YR Risk free rate, tenants / new leases, macro-economic environment, interest rates, cash flow etc. 

Is there a go-to source to find out the cap rates of properties?
[{"id": "gikdy21", "text": "You cannot have a cap rate without a sale. It is the relationship between a sale and the NOI.\n\nAll of the things you are talking about would change the NOI.\n\nYou can look at cap rate surveys, or there are several mathematical ways to estimate what you think a cap rate should be. But the only time you get actual cap rate comparables is when a property sells.", "replies": [{"id": "gimkusu", "text": "Makes sense that the cap rate is only calculated when a sale happens. However, I'm interested in tracking the changes in cap rate. With the variables I mentioned, we estimate the cap rate and the valuation of the asset. \n\nAnother way to look at this is, the calculated/dynamic cap rate determines the asset value.", "replies": [{"id": "gimlxtk", "text": "Are you talking about overall average cap rates changing over time? That\u2019s just when average sales caps per asset class are reported, quarterly or annually or whatever. But as many others have said, a cap rate is highly property-specific so your original question doesn\u2019t quite make sense. Let us know what you\u2019re trying to find out or achieve and we\u2019ll do our best to help.", "replies": [{"id": "ginbhsh", "text": "I'm talking about measuring/estimating the cap rate for a property based. Like what would the cap rate be if we put the property up for a sale. A metric that indicates the value (asking) of a property, prior to the sale. This metric is different from actual cap rate which can only be measured during a sale.", "replies": [{"id": "ginhvrz", "text": "What factors are you thinking of including that would affect the cap rate? And why wouldn\u2019t it be better to just look at those individually?", "replies": [], "depth": 5}, {"id": "ginkkyx", "text": "I guess, what I am trying to say, is that a capitalization rate is almost more of an output indicator than an actual valuation measure. The people who do investments that consider risk-free rates, long-term cash flow trending, and debt financing usually would consider a cap rate too simple.\n\nA cap rate is really just supposed to be next year's NOI relative to the same price/value today. Because it includes value, it should reflect lease increases in the future, i.e. presumably an investor would agree to a lower cap rate in exchange for more rent increases going forward. If the debt is cheap, then an investor would require a lower cap rate to make the same return on their equity, which would probably cause values to go up. And so on.\n\nThere is a long list of these things that are \"built into\" the cap rate and it would probably make more sense to track those things, look at long term cash flow, probably spend more time in yield analysis, and treat the cap rate as a simple 1-year on cash rather than an \"end-all-be-all\" figure.", "replies": [{"id": "gio66yv", "text": "&gt; If the debt is cheap, then an investor would require a lower cap rate to make the same return on their equity, which would probably cause values to go up.\n\nWouldn't an investor be better off paying less, i.e. higher cap rate?  The fact cap rates compress because of low interest rates is merely a result of more competition.  Maybe I am misunderstanding your statement.", "replies": [{"id": "gipfk5i", "text": "You are correct that the investor is better off paying less, and getting the higher cap rate, and that the lower cap is a result of competition.  That's all he was saying as well.  When he says \"require a lower cap rate to make the same return\" he means that they are able to pay more to make the same IRR. As you stated, that becomes true for everyone and the cap rate compresses.", "replies": [{"id": "giq0ss8", "text": "OK, my problem with that is the \"requiring a cap rate\"!  If you \"require\" a 10% cap rate in a 5% cap rate market you are at best a lookie loo.  If you just \"require\"  a  10% cap rate well I can sell them to you all day long in a 12% cap rate market.  Wanna make an offer?", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}, {"id": "gipgfn5", "text": "I really, really feel like a lot of people who work right in the thick of real estate investment don't get the first point you mentioned, that cap rates are more of an output indicator.  I usually say that cap rates \"fall out\" of the calculation, and that IRRs are the real shit.\n\nBut hey, it's still useful for averages.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gp74su8", "text": "Actually you can get a cap rate from the \"band of investment \" process.  That is the process that is usually used when there are no or few comparable sales.  Also see Akerson method.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gikjhfb", "text": "Cap rates are determined by a property sale, or estimated by an appraisal. Sure, investors can best guess estimate what they think the property value is at any given time, but that\u2019s simply an estimate because the market dictates cap rates once a property is sold.", "replies": [], "depth": 1}, {"id": "giklscf", "text": "When a trade occurs. Everything else is just an estimate.", "replies": [], "depth": 1}, {"id": "giktem2", "text": "You're getting a lot of answers like, \"dynamic\" or \"vary\".  They're made up.  Don't compare cap rates that realtors tell you.  Calculate it out yourself.  It's just a tool for realtors to justify prices.", "replies": [{"id": "gilaz1f", "text": "Made up?\n\nThey are the NOI/Sales Price.", "replies": [{"id": "gilb8h1", "text": "Not when it's on the MLS with an 8% cap or whatever the realtor decides to stick on there.", "replies": [], "depth": 3}, {"id": "gimak4m", "text": "Generally speaking realtors will dress up the numbers when presenting a property. Especially if it\u2019s multi family, the will generally use next years proforma numbers to calculate the price. Small multi family is generally the most generous with their numbers because the quality of realtor falls to those that primarily do residential.", "replies": [{"id": "gimlocv", "text": "Yep, finding deals on an mls is always a crapshoot of quality. Keep mls for SFRs.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gimlhgs", "text": "The fact that you are using the term \u201crealtors\u201d in the context of commercial real estate shows that you really don\u2019t know what you\u2019re talking about. \n\nThe cap rate is NOI / Purchase price. It\u2019s a return on the full investment amount if you paid cash. While yes many CRE *brokers* do sometimes massage the numbers, that doesn\u2019t mean they\u2019re made up. \n\nIn any case, OP, you need a qualified broker that specializes in the asset class, and a reputable loan broker to help you analyze the investments you are interested in to help show you the ropes.", "replies": [{"id": "gimmv4i", "text": "I'm well aware of how to calc a cap rate.  And if you want to be a dick about it, it's not NOI/PP; it's NOI/(Cost of acquisition(or PP)+Cost to rehab)", "replies": [{"id": "gimq58f", "text": "A true cap rate comes from an analyzed sale by a third party professional company.  A purchase price can contain amounts that are not NOI related so using it can skew the cap rate.  Cost to rehab has little to do with the cap rate.  The cap rate should be based on what the market is paying on rehabbed properties and the rehab costs backed off the market value.  It buyer over or underestimates rehab costs he gets or eats his estimate.  It doesn't change the cap rate.", "replies": [{"id": "gims1d1", "text": "Oh neat so the cost to get the prop to income producing doesn't figure into it.  /s", "replies": [{"id": "gims9zm", "text": "Not in the cap rate.  How could it?", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "gio7mxl", "text": "Nope Stabilized NOI/PP+Rehab is \u201creturn on cost\u201d not cap rate.", "replies": [{"id": "gio8vro", "text": "I guess if the prop has no income then the cap rate is zero huh?  Does that make sense?", "replies": [{"id": "giopccs", "text": "Um, yes. By definition. The \u201cgoing-in\u201d cap rate is zero with no income.", "replies": [{"id": "giorkvy", "text": "There is no such thing as a ZERO or negative cap rate.  Geez!", "replies": [], "depth": 7}, {"id": "giowm60", "text": "Do you know how to calculate NOI?  A vacant building definitely has PGI which is the start of the NOI calculation.", "replies": [], "depth": 7}], "depth": 6}, {"id": "giphnal", "text": "Yeah. That makes sense and is correct.\n\nAlso one of the reasons that cap rates really only make sense on stabilized income.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "gimpmqp", "text": "Cap rates don't measure returns.  they come from an income approach to value called direct capitalization.  In a 10% cap rate market investors have paid $10 for a dollar of possible dollar of NOI.  In a 5% cap rate market investors have paid $20 for that same NOI.  You cannot tell which property has the higher return.  that would be like saying paying $1000 sf for a property will be less profitable that a property in another market that only sells for $500 sf.", "replies": [{"id": "gimsoop", "text": "Bro, we all understand percentages. It\u2019s a percent return on a given dollar invested.", "replies": [{"id": "gimt1bq", "text": "Bro, all percentages are not \"returns\".  Cap rates measure VALUE.  Have you heard of direct capitalization?  Look it up.  If I am selling $100,000 NOI in Indy for $1,000,000 (10% cap rate) and my brother is selling $100,000 NOI in SF for $2,000,000 (5% cap rate) then tell me why the SF guy is getting TWICE as much money as me for only HALF the \"return\".  Hmmm", "replies": [{"id": "gimwla5", "text": "Yes every argument on the internet with \u201clook it up\u201d is the most sophisticated argument. I feel like you just keep defining a percentage. If I buy a US Treasury Bond with a 1% yield, that is my return on every dollar invested 1%. Same with cap rate, same with a lender making 4% on every dollar they invest, same same same. It\u2019s a percentage so of course different dollar amounts invested would return different total profits. This isn\u2019t that difficult, broseph.", "replies": [{"id": "gimwxx5", "text": "So you don't know what direct capitalization is and you cannot answer a simple question of why someone is paying twice as much for half the \"return\".\n\nDirect capitalization is an income approach to value.  It results in a capitalization rate.  That is the percentage that YOU think is a \"return\"!", "replies": [{"id": "ginto81", "text": "You are confusing return (%) and net income ($) and profit (also $). I\u2019m done with this I\u2019ve lost interest.", "replies": [{"id": "gio4793", "text": "Of course you have.  That is why you don't know what you are talking about.  Stick around and I can educate you properly.  Without education you sound like a Broron.", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}, {"id": "gimxlys", "text": "You can't compare a US Treasury Bond with real estate.  A bond does not have NOI and is the same when purchased throughout the world.  Geez.  Here's another concept to ponder.  Class A office CBD in Philly is trading at about a 7% cap rate and in SF trades for about a 4% cap.  Now do you believe that Philly has almost TWICE the \"return\" as SF?   Hmmm", "replies": [{"id": "gio9f65", "text": "Again, you and I are not on the same page defining terms. You keep defining return as cash in your pocket (so yes a lower cap rate deal that you pay more for in SF will probably \u201creturn\u201d more cash), whereas I define return as a percent on each dollar invested which is the same way all other non-real estate investors define return (ie ROI is a %). A cap rate is useful only as a short hand to evaluate risk of two investments when the actual purchase prices might be different. So two properties with equal cap rates will theoretically be the same relative risk, although one may be a larger investment and therefore a larger return (again, with equal caps). By the same token, two equal purchase prices but differing cap rates illustrates that one is lower risk than the other. It\u2019s a measure of risk, exactly as a US Treasury Bond at 1% is essentially risk-free (which is why the investor demands a much lower yield/\u201creturn\u201d than a 4%cap investment in SF or a 7% in Philly).", "replies": [{"id": "giojgrb", "text": "It is you that is defining NOI as profit since you are calling it a \"return\".  I have correctly stated that cap rates measure what investors have paid for NOI.  $10 in a 10% cap rate market and $20 in a 5% cap rate market.  That is the only mathematical factual result of V=i/r.  \n\n&amp;#x200B;\n\nCap rates do not measure \"return\" or risk.  They can be indicative of both is all.  In my Philly and SF example if cap rates measure risk then you are saying that Philly has almost TWICE the risk.  Nah. they probably have some of the same national tenants and local tenants that have similar credit strengths.  For Class A CBD office I would say that the risk is essentially the same in both cities.  Can you show me how you think the risk is almost double?", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gikxcre", "text": "You seem to be conflating average cap rates which are what brokerage firms report and the actual cap rates used to value properties. Average cap rates are guideposts which give you an idea of what the market is seeing overall in terms of required income per dollar spent on a property, but that has a tenuous link to any given property valuation since there are all the factors you mentioned  (and others) that will affect the cap rate on any given sale.\n\nThe actual answer: cap rates are bespoke numbers that each sale generates. What's the reason for you to want this insight?", "replies": [{"id": "giml646", "text": "We'd like to estimate the change in cap rate at given point in time and the valuation of the property.", "replies": [{"id": "giol31e", "text": "Going forward or looking back? Is this going to be used in an official capacity or strictly for your own purposes?\nYou can guesstimate an approximation on a cap rate given real estate agents publications in your area and how your property compares to the average but that's going to differ from an appraisal or an eventual sales price. If you need a formal number you'll have to hire an appraiser.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gilht53", "text": "The cap rate correlates with the level of risk of an investment and what a buyer is willing to pay for that income. Interest rates influence cap rates, low interest = lower cap because money is cheap. This drives prices up. But lenders are risk adverse so if it\u2019s a riskier asset borrowers may need to look else where which means they\u2019ll have to pay a higher rate which should correlate with a higher cap rate. Obviously there are other factors but I\u2019m talking to myself.", "replies": [], "depth": 1}]