A government building is viewed as less risky than a "used car lot," so it would have a lower "capitalization rate" (or "cap rate"). The cap rate and the value of the property are inversely related, meaning that when the cap rate goes up, the value goes down. Therefore, a used car lot, which is seen as a higher risk, will have a higher cap rate and a lower value.
These are questions that the above text answers:
1. What is the relationship between the cap rate and the value of a property?
2. How is a government building perceived in terms of risk compared to a used car lot?
3. How does the cap rate affect the value of a property?
4. What is the significance of a higher cap rate for a used car lot?
5. How does the perceived risk of a property impact its cap rate?
6. What is the relationship between the cap rate and the risk associated with a property?
8. Why is a used car lot considered to be a higher risk property?
10. How does the cap rate differ for a government building compared to a used car lot?