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Buying a Farm at a Ten Cap Rate
Bob Greene: A man bought a cheap farm in New York. He figured out that, just based on normalized prices over the long run for corn and soi beans, this farm is going to give him a return of ten%. In other words, he's buying this at a ten cap rate. That sounds good if you consider that it was a 10 cap rate based on just whatever farming practices the f d i c was using. It wasn't compared to the actual farmers who cared about what they were doing. Nowright now, let's go over to real estate. The same thing happened to buffet in a in new york city,. They lent too much money on sub prime real estate