Tommy DobczykOpportunity Zone Advisor, OZ Wizard · Director of Development | Certified Opportunity Zone Advisor

Justifying a 12% Cap Rate: Risk vs. Reward #shorts

24 Jun 2026 · 1 min

Watch on YouTube

0:44

Tommy Dobczyk explains why a car-wash property warrants a 12% cap rate instead of 6%. The tenant is a small operator started in 2021 with no verifiable income, the building is outdated, and vacancy would require full reconstruction. A $2.1 million offer reflects these risks.

Chapters

Rewrite the LOI and point out that the reason why there's a 12% cap rate is because it's risk-adjusted cap rate for everything else. The 6 cap would be if it was a national credit, AAA-rated credit rating car wash provider, and this is not. This is somebody who started in 2021. They've, they, there's no proof of their NOI. There's no proof of it. Being able to scale or expand, and we know that the facility is outdated. And if the current provider was to, or the current tenant was to vacate, we would have to reconstruct or repurpose the entire property. So make this why our offer is at 2.1 and 12%.