The Cap Rate Trap Most Investors Miss A higher cap rate does not automatically mean a better investment. That’s one of the easiest mistakes to make when evaluating real estate. A cap rate is a snapshot. It tells you what a property is producing today relative to the purchase price. But it doesn’t tell you why that cap rate exists. A Mobile Home Park might trade at an attractive cap rate because: • Expenses are being underestimated • Collections are inconsistent • Infrastructure needs significant capital • Occupancy looks better on paper than economically • The market carries risks that justify the higher return This is why we don’t look at Mobile Home Parks as properties that simply produce passive income. We look at them as operating businesses. The real questions are: Is the NOI sustainable? Where can operations improve? What capital will the property actually require? How much of the projected return depends on execution versus market appreciation? And what happens if...