The DANGERS of Record-Low Cap Rates [Mistakes To Avoid]

[@BreakIntoCRE]

What kinds of cap rates are you seeing in your market today?

[@muhammaddutt8557]

Too low for newbies

[@petermarzo9882]

4.5-5.5% avg stabilized 5.5-7% avg value add

[@fzhangwfb]

sub 4

[@BreakIntoCRE]

@@muhammaddutt8557 haha well said.

[@BreakIntoCRE]

@@petermarzo9882 great feedback - thanks!

[@jacobkahle6317]

Hello, I'm a debt analyst at a life insurance company. I've been with my company for almost three years. Really enjoying your content! Not only has it help me explain to my family that there's more than residential real estate in the world (HA!) but I do find myself learning from your channel. Knowledge is power!

[@JesseFox-q9e]

Hi Justin - love your videos! I'm curious how you're calculating the % equity drop/increase in your examples?

[@alexandervalladares2501]

Justin great video as always... Thank you for your content !!!

[@BreakIntoCRE]

Happy to help, Alexander - thanks for watching!

[@petermarzo9882]

Great Video!! Loan Constant very important and often overlooked.

[@BreakIntoCRE]

Agreed!

[@mosheovadya]

Excellent insight. Clear and concise.

[@BreakIntoCRE]

Thanks, Moshe!

[@themiamikid_3059]

In a recent video, you mentioned that ESG roles could be a good career move in the coming years. What are some examples of ESG roles? Currently work in construction management at a large GC. Thanks for making these videos.

[@davidroldan6007]

Excellent video, as always, Justin. I have a quick comment. Not long ago, you posted a video on what an acquisitions analyst does on a day-to-day basis, and also you have an other video on how you would start over again to break into the CRE industry, and in this second video, you mentioned that the first job you would like to get is an investment sales analyst at a top firm. Could you please do a video on what you do on a day-to-day basis in that role? That would be awesome, considering that is a great start in CRE because of the transaction volume. Thank you so much!!!

[@cafriyie18]

Interest rates are at all time lows so Im not surprised.

[@awordz1423]

Great video, but I come with a question: where do you recommend I start as a 20-something with no capital?

[@Bigbdhdhs]

Are off market transactions just screwing over the seller?

[@Re3iRtH]

I'm an M.D. and military officer who started with rentals, got the syndication bug in 2017 and have been in over 25 real estate opportunities as an LP. I love being a passive investor! It sounds like this channel is more for the operational / GP / PM side am I right?

[@johnmclaughlin1189]

Varys by product and tenant credit but overall Urban 3-5%, Suburban 5-7% throughout New England market place, recent broker NNN listings in 3-5-4.5% range.

[@williamwhittington4890]

Our company develops NNN Freestand buildings for single tenants such as Canes, Dutch and other credit tenants. We are primarily Dallas and PHX market. I am curious on your thought with the recent interest hike and how that will affect our buy side investors. DO you think that more interest will slowly bring the cap rates back up to pre-covid levels or will it diminish the value of this asset. Also, love your videos keep up the great work

[@Kurt-rg8jq]

Is Loan Constant the same as Debt Yield?

[@BreakIntoCRE]

Debt yield is NOI/Loan Amount, so this is a different metric than the loan constant.

[@Kurt-rg8jq]

@@BreakIntoCRE Got it. So Loan Constant is using the PMT formula from the Interest Rate =PMT(interest rate/12,Term Length in Years*12,-1)*12

[@marinawong9662]

I think this year I see more and more IO over the entire hold period analysis. In the past, it would be just IO for the first 2 years or so. This low cap rate is really driving syndicators to be more risky. Just hope the rent increase can go on for another year or 2 to generate the cash flow needed.

[@TrueWojak]

Just like in physical goods stacking up in warehouses due to short lived supply chain shortages, soon the market will see a flood of real inventory, Q2-2023 or so while retreat back into core coastal metros is a good call, there will be more flexibility in adaptive reuse in these markets than in years past, with cities giving some leeway to developers to convert ghost office buildings into MF, storage, and last mile/second industrial Also, if the inflation trade is accurate, won't cap rates go up as t-bills break out from below 2% long term? I expect that the real end of this 4 CAP party comes once continuous escalations in rents meets the reality that incomes are barely keeping pace with inflation, 35% yoy increases and wages went up by only 6%? Is that really sustainable?

[@shubhambansal7968]

Watching this today, and no doubt why JK is so respected

[@ahmedhamed1092]

I miss 2014 when you can consistently find 15%-20%

[@colewest2259]

The OG

[@brianwise5586]

Im in Philadelphia and in urban markets I'm seeing cap rates between 6-8 percent and in downtown and neighborhoods in close proximity anywhere between 3-5 percent

[@BreakIntoCRE]

Great feedback - thanks, Brian!

[@brianwise5586]

@@BreakIntoCRE your welcome! Great platform to be subscribed to.

[@rolio222]

Great video but raw land is super scarce in a lot of low cap rate areas

[@Tazangamoz]

💯

[@tcpa8283]

You might as well speak in Arabic or Swahili. How many of us can really follow and understand what you said without the academic background and experience you have? 😂