Why is cap rate important to rental income investors?

[Sanjay Aluri]

Hi All,

Appreciate response from experienced rental income investors. Im in the process of learning the basics of RE investing (im a beginner): wondering, why is a cap-rate important ? DO lenders seek this info, even if I go for a conventional loan, instead of seeking investor funds? As far as Im concerned for an individual investor shouldnt the simple math: return on initial capital outlay be enough? if i have positive cash-flow on my initial outlay, assuming property value is not volatile, shouldn't it be enough? how much I expect as an ROI is my problem, anyways isnt it?

Everything seems to be so cap-rate oriented not sure how should it make sense for me, it is anyway a hypothetical/speculative %. What matters is cash-out and cash-in, isnt it?