Do You Buy for Cash Flow or Cap Rate... or Both?

[Jordan L.]

In searching for my next investment property in the market I'm looking at, I'm starting to question my ability to attain the cap rate I'm shooting for in the neighborhoods I'd like to buy in.  I'm looking in and around Charlotte, NC at A- and better areas.

I know there are differing opinions on this--  if I find a property that will break even or cash flow ever so slightly at asking with 100% financing, but with only a 5.6% projected cap rate at this price, is it worth considering?  Obviously I wouldn't offer asking, but should I even bother?  10% allowances for maintenance & repairs, 10% for vacancy, and 10% plus half a month's lease for property management have all been calculated in.

There are cash-flowing deals to be had but nothing with a mind-boggling cap rate that I've seen.  Should I be discouraged?  FYI--  my investment strategy is to pay properties off ASAP and live off their income once I've acquired a large enough portfolio.  I've done this twice already.  I live in one free-and-clear and rent the other.  It's awesome.  The more I get, the faster I'll be able to go...

Should I sit on my money and keep hunting for that ever-illusive 10% cap rate in a good neighborhood or start getting more aggressive with my offers?

Thanks all.  :)