What is considered a high cap rate?

For residential rentals, 8% and above is high, and 10% and above is very high. Most US properties trade between 4% and 8%, so anything above that range means buyers are demanding unusual income for unusual risk, or the expenses behind the number are understated.

High cap rates cluster in low-cost Midwest and Southern markets, older stock, C-class neighborhoods and small multifamily. The income is high relative to price because appreciation is slow and repairs and turnover are frequent.

Above 10%, recompute the expenses. A 12% listing cap rate is usually an 8% property once vacancy, management and reserves are added. High is also relative to the market: 7% is high in San Diego and low in Cleveland. Compare a property to recent sales of similar rentals in its own submarket before calling it high or low.