The Cap-Rate Strike Rule™: How We Turn Broker Math Into Investor Certainty

The Cap-Rate Strike Rule™: How We Turn Broker Math Into Investor Certainty

The Cap-Rate Strike Rule™: How We Turn Broker Math Into Investor Certainty

Written by Jai Thompson

I manage a private equity platform deploying $13–18M per quarter across multiple real estate asset classes.
Our model is asset-based, escrow-directed, and execution-driven, allowing us to close in 23 days or less with certainty and clean title flow.

We acquire and operate across:

  • Luxury estates

  • Single-family residential portfolios

  • Multifamily communities

  • Hospitality and hotels

  • Mixed-use properties

  • RV parks and mobile home communities

  • Golf resorts and destination assets

  • Specialized housing and income portfolios

Capital is structured. Operators are paid. Reserves are built in.
All disbursements are controlled through escrow.
We deploy with discipline, transparency, and speed—while tithing back to the communities we serve.

📧
MrJai@kingjairealestategroup.zohodesk.com

📞 Call or Text: 980-353-2408


Why Cap Rates Lie (and Why We Don’t Argue With Them)

When a broker says:

“It’s a 5.5 cap.”

They are not lying.
They are selling retail optimism.

Cap rates are seller language, not buyer safety.

That’s why we use Marco’s Cap-Rate Strike Rule™ — a simple adjustment that converts broker math into investor survival math.


Marco’s Cap-Rate Strike Rule™ (Plain English)

The rule does three things:

  1. Adds realism (markets lie)

  2. Adds margin (things break)

  3. Forces discipline (no hope underwriting)

The Rule

  1. Take the broker cap

  2. Add +1

  3. Multiply the result by 1.5

The final number is your STRIKE CAP.

If the deal does not work at the strike cap, you do not buy it.


Step-by-Step (3rd-Grade Math)

Example 1 — Broker says 5.5% cap

Step 1: Add 1

5.5 + 1.0 = 6.5

Step 2: Multiply by 1.5

6.5 × 1.5 = 9.75
Strike Cap = 9.75%

8-Unit Apartment Example (Full Walkthrough)

Broker Info

  • Units: 8

  • Asking Price: $1,000,000

  • Broker Cap: 5.5%

Step 1: Back into NOI

$1,000,000 × 0.055 = $55,000 NOI
Step 2: Apply Strike Cap
$55,000 ÷ 0.0975 ≈ $564,102

What Just Happened (Important)

  • Broker wants: $1,000,000

  • Your strike price: ≈ $564,000

That gap is not disrespect.
That gap is risk math.


Why This Rule Works

  • 5.5 cap = what the seller wants

  • 9.75 cap = what keeps you alive

  • The difference = negotiation room, structure, or a clean “no”

If the seller:

  • Can’t move on price

  • Won’t do structure

  • Won’t improve NOI

👉 You walk.


How This Plugs Into Our Model

We do not argue about cap rates.

We say:

“At a 9.75 cap, this is where the asset clears our underwriting.”

Then we either:

  • Structure with 85 / 45 / 24, or

  • Pass without emotion


One-Line Memory Hook (Teach This to Zia)

“Broker cap + 1 × 1.5 = strike cap.”

If it doesn’t work there, it’s not a deal.


Three More Examples (Rapid Fire)


Example 2 — Broker says 6.0 cap

6.0 + 1.0 = 7.0
7.0 × 1.5 = 10.5

✅ Strike Cap = 10.5%

If NOI = $100,000:

$100,000 ÷ 0.105 = $952,381

Example 3 — Broker says 7.0 cap

7.0 + 1.0 = 8.0
8.0 × 1.5 = 12.0

✅ Strike Cap = 12.0%

If NOI = $180,000:

$180,000 ÷ 0.12 = $1,500,000

Example 4 — Broker says 4.75 cap

4.75 + 1.0 = 5.75
5.75 × 1.5 = 8.625

✅ Strike Cap ≈ 8.6%

If NOI = $75,000:

$75,000 ÷ 0.086 = $872,093

What to Say to the Broker (Scripts)

Short Call Script

“Appreciate you sending this over.
At a 9.75 cap, this is where the asset clears our underwriting.
If there’s flexibility on price or structure, we can move fast.”


Follow-Up Email

Subject: Underwriting Range — Ready to Move

Appreciate you sharing the opportunity.
Based on our underwriting, the asset clears at a 9.75 cap, which puts value around $564K.

If the seller is open to structure or adjusting pricing, we’re positioned to close in 23 days or less.

Either way, feel free to send over anything else you have that fits this range — we’re actively writing checks.


Exit Gracefully (Always Leave the Store Open)

“This one doesn’t clear our strike cap, but I appreciate you bringing it.
What else do you have that we can look at today and move on quickly?”


Final Discipline Reminder

We don’t buy hope.
We don’t chase appreciation.
We don’t negotiate math.

We let the numbers speak — and we listen.

Structure over sacrifice.
Stewardship over struggle.
Every deal builds legacy.