As will all periodic costs, rents increase with inflation and local demand. If you assume that individual that will eventually purchase your property is expecting a return on investment that is similar to your own expectations, then cap rate must be held constant. You expect a ten percent return on investment (10% cap rate) so it would be prudent to expect that next buyer will also expect a ten percent return on investment. If cap rate is held constant, but rents and subsequent net income are increased, then selling price of property must also increase. By assuming a growth rate in rents for a given holding period, you can determine resale value of your investment, and magnitude of capital gains that you will realize from sale.

Cap Rates are used widely in real estate because they provide a simple method to determine a percent return on investment. From that, information, investors and realtors can determine proper pricing for an investment given an expected return. They can determine resale value of an investment and any associated capital gains. Finally, cap rates can be used to forecast to total expected returns on investment and confirm proper purchase price for an investment property.

Often we will still worry after decision is made, which of course is of no help at all.

"When once a decision is made and execution is order of day, dismiss absolutely all responsibility and care about outcome." - William James (1842-1910)

Rejection can be an unpleasant experience, but it just lets us know that we are imperfect human beings, and it is a chance to learn something. We have to let it go by as easily as we can and confidently carry on.

"What we have to learn to do, we learn by doing." - Aristotle (BC)