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Less desirable areas always have higher cap rates. Most investors are NOT looking to make money on the cap rate though. If you're seriously investing in real es
by inuhj 9y ago
Less desirable areas always have higher cap rates. Most investors are NOT looking to make money on the cap rate though. If you're seriously investing in real estate you're looking into development projects, re-zoning, etc. You're buying because you know the local government has a 10 year plan to revitalize that part of the city or some other strategic bet.
- sidlls 9y agoTrue, but I think the context here is people buying one (or a very small number) of single family homes as an "investment." My point is that to "invest" that way in a high cost area is not the smartest move. It's better to buy conservative dividend paying stocks. But if one must "invest" in property it's better to buy 10 for $200k than 1 for $1M. I also didn't mention risk mitigation: the risk of loss on the former is lower.
- prostoalex 9y ago> If you're seriously investing in real estate you're looking into development projects, re-zoning, etc. I don't think that's strictly accurate, there's something for every budget in real estate investment world, from buying a small condo to rent out to sovereign-fund-level buildouts like Las Vegas CityCenter or LA Metropolis. It's like saying that someone interested in stock investing would not be buying a few shares here and there, but instead go the Warren Buffett way and acquire entire companies to get synergies across industries. There are income-oriented investors and multifamily income funds who buy primarily for cap rates.