Cash on Cash Returns, SFRs in Los Angeles

[Andy Cross]

HELP!!

I'm having a hard time understanding what a good cash on cash return would be on an SFR in Los Angeles, CA.

There is an SFR in LA where the seller is interested in cashing out on it. However, when I run the numbers, It would only get a 3.5% cash on cash return.

It's a 3/2, and can rent anywhere between $3000 - 3500/month. I used the rental calculator and based on what I inputted, monthly expenses would be around $1340. Leaving an average Monthly cash flow of $1900+ (without a mortgage). That doesn't sound like a 3.5% cash on cash return. 

I'm so confused and these numbers aren't making any sense. Can someone help me make sense of this?