Are Cap Rates About to Go Up
[{"id": "djw3qw8", "text": "i dont get it, if interest rates go up, doesn't that mean expenses go up because of higher mortgage payments? also higher interest rates should mean that property values shouldn't should increase since its costlier to borrow. i feel like this points to a lower cap rate if anything. also higher cap rates for property owners means their asset is performing better than before, why would you sell if it is going good. ", "replies": [{"id": "djwa42q", "text": "Higher cap rate means cheaper properties... ", "replies": [], "depth": 2}, {"id": "djy2p79", "text": "cap rate=NOI/value (sales price). If cap rate is higher, that means NOI or sales price is lower. That could mean variety of things, but cap rates are measure of the markets perceived risk in an asset. When its higher, typically higher the risk. So, for a higher risk asset, you pay less, thats why you have lower prices when cap rates go up. ", "replies": [], "depth": 2}], "depth": 1}]