Is a good CoC return worth a low Cap rate?

[Jordan Hanksion]

Hey guys!

I just recently joined Bigger Pockets and this is my first post... so be gentle!

Ok, so I am currently looking to get into the buy and hold real estate market, specifically small multi families.  Of course, I have a few beginners handicaps, primary among them are low of startup capital and lack of experience (I am working hard at fixing my lack of education as we speak!).

My plan for managing my low startup capital (at least at first) is to use FHA Loans for my first few properties until I can support more conventional loans. My plan to, hopefully, alleviate my lack of experience is to pester all you nice folks! (seriously, big thanks to everyone answering us newbies' questions!)

As I will be using FHA loans to finance my initial investments my initial down payments should be quite low at 3.5%. Which, to my understanding, should be able to leverage my CoC return quite a bit, like 30-50% for some of the properties I've run estimation numbers on! However, also in my rough sketch estimations I have been finding that many of the properties I've been investigating have pretty low Cap rates (my test market is Portland, OR currently).

OK! So, my main question. Does a particularly high CoC rate make up for a particularly low Cap rate? Additionally, the importance of Cap rate in general is still a little confusing to me particularly when one is using financing to purchase an investment property. Shouldn't your primary concern be your return on actual out of pocket cash invested?

Please help me alleviate my ignorance guys/gals! 

Jordan