The ideal cap rate depends on several factors, such as:
- Location: Prime, high-demand areas tend to have lower cap rates due to their stability.
- Property Type and Condition: Newer or well-maintained properties typically have lower cap rates, reflecting lower perceived risk.
- Market Conditions: Broader market trends can influence cap rates, with higher rates often found in emerging or higher-risk markets.
A typical range for cap rates is 4-10%, but a “good” cap rate is highly subjective. Focus on how the cap rate aligns with your investment strategy, goals, and the specifics of the property and market.