Unsophisticated investors buy off cap rates. I don’t really look at cap rates when I am purchasing because it is usually manipulated. If the seller or broker leaves out an expense or over counts revenue it greatly distorts the cap. Therefore it is a bad data point. I normally look at the Profit and Loss statement cause that is where you can drill in line by line.
NOI vs. Capex Yield – CPE 19.11.2 – “Variables such as age, location and property type can influence how much capex is required to operate an asset”
I talk about this here.