Home Buying in Dallas>Question Details

Nasser, Home Buyer in Dallas, TX

in which one the cap rate is hire? commercial or residential

Asked by Nasser, Dallas, TX Wed Aug 7, 2013

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Brent Rice’s answer
Can you elaborate on the basis for your questions? Are you comparing investment properties? If so, what kind of property? "Commercial" property is a broad category and can have cap rates that vary greatly based on the type of business, location, stability of income and expenses, etc. Your question is very vague and is hard to answer with any kind of meaningful response. That being said, I have 25 years of commercial real estate experience if you would to learn more about it. If you are just getting into real estate investment, I would recommend to stick with residential property....specifically in the 2 to 8 unit category unless you have about $500,000 cash to invest.

View my profile for more about my background and how I can assist you.........

Brent Rice, Trulia Top Recommended Broker
The Rice Group, Inc.
Website: http://www.ricegroupinc.com
0 votes Thank Flag Link Wed Aug 7, 2013
Pick 1 Realtor and hire them to assist you in any questions you have with any property you are wanting.
0 votes Thank Flag Link Wed Aug 7, 2013
Probably residential on average, but it is a function of the rent, the expenses and the purchase price, so either could be higher.

Capitalization Rate or Cap Rate is just w way financially to compare assets of different prices, different rents, different expenses to each other. That is not the only thing you want to look at ....for example it does not factor in your guess for appreciation....or your exit strategy. For example on commercial buildings who are you going to sell it to.....likely another investor ....who will look at the cap rate. On residential you might sell to a retail buyer who does not care about cap rate.
0 votes Thank Flag Link Wed Aug 7, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
Cap rate will vary on a property to property basis, but historically commercial properties have historically had higher cap rates than residential properties.

Typically commercial properties are much more difficult to purchase because of the strict financing requirements where as residential properties have many more mortgage option available.

If you are interested in either type of property I have off market properties that are available for sale for interested buyers.

For example:
128 unit property in Duncanville 5.25M
178 unit property in Irving 5.9M seller will carry back a note (some seller financing available)


Chris Hutchinson
The Michael Group
0 votes Thank Flag Link Wed Aug 7, 2013
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