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How to get Cap Rates Appraisal Humor
 

Appraisers frequently ask me about getting comps on the Internet. I recently intercepted a discussion on cap rates on the Internet. How to get Cap Rates Appraisal Humor.
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Hey…wait a minute. Doesn’t the current edition of the Appraisal of Real Estate relate that the 2020 cap rate for all buildings is 10.14%?

Thomas D. Morgan
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I was taught by Ed Compere, MAI that you look for it posted on the property. It may be a plaque or stamped in the concrete. I guess I gotta get the current edition. I thought it was always 10%. (I hope this doesn’t damage my Prego approach to the OAR).

Scott Jura
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Most of the quality commercial buildings in my market have data plates. These are usually brass, about 3 inches by 6 inches. They are often placed on the outside of the building near the electric service entrance. Stamped on the plate is the year of construction, gross and net area, and usually the proper OAR. Sometimes vacancy rates and expense ratios are included. If the plate is missing or unreadable, one can usually interpolate from the two adjoining buildings. The use of data plates sure is easier than deriving the data from the market!

Larry A. McCoy, MAI, RM
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Ed was only partly right. While I have found the cap rate stamped in the concrete, as Ed suggests, I have never encountered it on a plaque. Many developers are getting far more clever and even devious about where they hide the cap rate. Once, I found it stamped on the plywood sheathing of the roof, covered by three layers of roofing materials. Another time, it was cleverly hidden under the flange of one of the porcelain fixtures in the women’s restroom. The moral is that sometimes the cap rates can go through the roof, and other times it can be in the toilet.

Robert S. Lettman
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Larry –
If you interpolate from the two adjoining buildings, you ARE deriving the data from the market!

Robert S. Lettman
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And from another quarter… I learned from a fellow in Alaska that the real way to get a cap rate is to look at the “regular” gas price in your area and use the numbers to the right of the decimal point! Works for me!!!!!

Jeff Osmundson
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The above discussion was posted on an appraiser mailing list.

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