Re: If I buy a turnkey 4Cap that has no room for value add, with rates at near 7% how and why are people buying these assets?

If I buy a turnkey 4Cap that has no room for value add, with rates at near 7% how and why are people buying these assets?
What’s the play people?
What am I not seeing?

Not everyone is looking for return on capital, some are seeking return of capital. That is, some people just want an asset that they can securely park money in and know they won't lose it. There are also depreciation reasons. There are many reasons l.

You are allowed to depreciate the value of a building over 27.5 years, or, for more sophisticated investors over 5, 7, and 15-year periods. The depreciation expense is recorded on your statement of cashflows, similar to a normal expense, and it reduces income, which means you pay no taxes on the depreciated dollars.
"Other reasons" is meant to be general enough to include all reasons people do things which you and I might not see fit to do, there are infinitely many of them.
The larger your portfolio, the more you benefit from tax advantaged plays, which the normal cashflow investor doesn't think about.

Why take the operational risk when they could "park" money in 2yr treasuries at 3.25%.

Tax advantages, as well as long term appreciation -- even under very conservative projections -- make it an attractive class, especially if it adds diversity to your portfolio, would be my guess

Ha! This guy didn’t blow off the 8am finance class. Sometimes it’s not about how much you make, but how little you lose…

 Thanks for your reply, for educational purposes can u elaborate on the depreciation and “other reasons”. Tyia

The huge investment companies; life companies, pension funds, foreign money are still allocating money to multifamily. They are buying at 3.5 -4.5 cap rates their debt cost is nowhere near 7% yet. Investors that put money in, still expect a return of say 5-6%, maybe more in some cases. Tru, these economics will slow deal flow...and some, as you suggest, dont make sense and will make the next owner lots of money

The huge investment companies; life companies, pension funds, foreign money are still allocating money to multifamily. They are buying at 3.5 -4.5 cap rates their debt cost is nowhere near 7% yet. Investors that put money in, still expect a return of say 5-6%, maybe more in some cases. Tru, these economics will slow deal flow...and some, as you suggest, dont make sense and will make the next owner lots of money