Posted by Paul Ness, MAI on January 13, 2004 at 06:37:21:
It depends on what you mean by being priced properly based on income stream. If there is not much expectation of increasing rents and value over time, then you need to get a larger annual return on your equity investment and the way you do that is by paying less, i.e. a higher cap rate.
Now, if all the similar properties in your market are facing the same expectations, then the range of cap rates from their sales would be reasonable to apply to your property.