cap rates in massachusetts

What Will Next Year Bring for Cap Rates in Massachusetts?

What Will Next Year Bring for Cap Rates in Massachusetts?

cap rates in massachusetts cap rates in massachusetts

Many commercial loans originated in 2017 offered a 4.5% rate that amortized over 25 years.  As the Federal Reserve bank has increased interest rates, many commercial real estate owners are asking , what will next year bring for cap rates in Massachusetts?

Based on an assumed borrowing rate of 5.5% today for 25 year amortization, in order to achieve a 10% equity dividend rate, equivalent to a 4.5% borrowing rate, cap rates in the greater Boston area would have to increase by .53 points.  Thus, a 7.0% cap rate would rise to 7.53% to maintain the same 10% cash on cash return.

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