Those that have contacted me directly have expressed concern about posting here to get information because of the ire I seem to get by posting correct information.
I call bullshit on that. In fact, how about a friendly wager? I'll put up proof of those that have directly contacted me with complaints about you, and you put up proof of those that have contacted
you with complaints about
everyone else combined. Loser is banned from posting for a month.
Now you want to go behind closed doors to further spread incorrect information.
/eyeroll
I want to "go behind closed doors" (i.e. discuss in PMs) to not clutter up the forums with the same old argument. You prefer to * in public. I don't.
As far as "spreading incorrect information?" Don't accuse me of that again please without some proof.
That said, you are the one spreading incorrect information, IMO, and here's my proof of it.
You say:
Cap rates for SFH are not reliable and are not meaningful in any way for SFH's and are not used by professional investors.
I disagree, as do most posters here. But since that isn't enough for you, check out this article from BiggerPockets:
http://www.biggerpockets.com/renewsblog/2013/03/30/battle-of-the-cap-rates/It's all about cap rates on SFRs.
Further, Frank Gallinelli, the author of
What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures comments on it, saying:
An excellent article, Ali. In fact it should be required reading for every newly-minted investor.
He makes a good point in the comments as well that I think both you and I will agree with:
Cap rates are essentially a market-driven metric — a market cap rate represents the rate of return that investors in a particular location are actually achieving with a certain property type (office retail, etc.). As such, you really can’t describe a rate as being high or low universally. A 9% cap rate on a particular property might seem very high to an investor in midtown Manhattan, while the same rate could seem very low to someone in Upper Dry-Rot County.
I don’t want to invent any new terminology (we have enough already) but perhaps a way to wrap your mind around this is to start by recognizing that the market cap rate is, as I said, the rate of return other investors are actually achieving for a given property type in this location. Then, when looking at a particular property, calculate its cap rate and ask, “Is this property yielding a market cap rate, an above-market rate or a below-market rate?” I think describing a property as being above or below the market rate will tell you more than describing it as having a high or a low rate.
You say they aren't used by professional investors, I say that plenty do.
Are cap rates used for SFRs? Yup. Can they be misapplied and incorrectly used? Absolutely. (They are way more applicable - even designed for - commercial properties.)
But do professionals often use them for SFRs? Yes. Are they completely useless? No way.
Okay, so playing this out... now you post some article where someone talks about cap rate with commercial, and I'll agree with most/all of it, but you'll add on one throwaway line at the end of your post that says they don't work for SFRs, with no substantial reason why or proof.
As I said before,
you don't use cap rates for SFRs. But, believe it or not, you aren't the only real estate investor out there, and that doesn't negate the fact that people do use them. The proof is above, they are used.
So can we finally agree to disagree on this and stop bickering about it?