Why Cap Rates Have NEVER Mattered More (NOI / MKT Value)

Why Cap Rates Have NEVER Mattered More (NOI / MKT Value)

Although cap rates may sound complicated - they're anything but complex.

Just think about the yield (cash-on-cash income) you get on your savings account.  Caps show investors the yield (income) they earn on their real estate properties.  

Today, that number is more important than ever. Not just because more people are entering the market, but because of who is entering the market.  Pension funds, insurance companies, and especially sovereign wealth funds have, for the past decade (or more), been moving more money from fixed income investments (Corp Bonds, CMBS, High-Yield) to equity investments into real estate assets that pay cash flows (just like bond coupons).  

At this point, "entered" is probably more realistic.  This is certainly not a new story; but it's about to get more interesting.  

Rates are rising but rentals are flattening, if not declining.  Those with strong demand and stronger balance sheets will be fine.

That reminds me, where did I put my SHORTS?