Questions about accurately calculating cap rates??
We have been thinking about property cap rates and have some thought on how they're calculated. Platforms like LoopNet, Moody's REIS, RCA etc. have Cap Rates. While the income / NOI data is recent, the market value data may or not be recent. Is it fair to calculate a cap rate based on sale value of property from few years ago? Is this the standard in the industry? Any thoughts on how we could calculate cap rates that adjust for current market value of the property?
[{"id": "hlz348s", "text": "You need to reach out to local brokers and appraisers to get the most up to date local market rates from recent transactions \u2026 just fyi the cap rates during these Covid times are really irrelevant and you should be using a DCF analysis", "replies": [{"id": "hlz4dtr", "text": "Real estate appraiser saying this is correct.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hm1tcji", "text": "Why the hell do people love downvoting people so much on this sub?\n\nOP asks a legit question and has a 33% upvote, jesus christ, what a bunch of cranky boomers\n\nGo over to r/programming and people are super helpful, ask a question here and get flayed\n\nProbably because none of this is that hard and people don't wont newcomers to spoil the easy money", "replies": [], "depth": 1}, {"id": "hm23j0n", "text": "Valid from past 24 months generally speaking.", "replies": [], "depth": 1}, {"id": "hmba9hj", "text": "What is the end goal of this calculation? Are you trying to estimate updated values or something else? I don't think that you'll find NOI (or the components of property-level revenue or expenses) to be updated on most of the debt and equity platforms, and they are typically optimistic on the selling platforms like loopnet.", "replies": [], "depth": 1}, {"id": "hmgutce", "text": "No, it is not \"fair\" to calculate cap rate from the sale of a property.  The cap rate is based on current revenue not past or potential.", "replies": [], "depth": 1}]