Please help me to analyse deal

[Sophia Maler]

I'm mulling over a deal in CA (SF Bay area). 

Here is the output of the BP calculator: 

Monthly Income: $2,400.00	Monthly Expenses: $770.00	Monthly Cashflow: $1,630.00	Pro Forma Cap Rate: 3.62%
NOI: $19,560.00	Total Cash Needed: $546,000.00	Cash on Cash ROI: 3.58%	Purchase Cap Rate: 3.62%

Since I'm new to investment, I don't understand if this is an OK deal. 

[Bill F.]

@Sophia Maler It depends.

Short answer: 3.62% isn’t a good return, but that is just your return from cash flow. If you buy it, rent it for a few years and sell it for a higher price, the appreciation has made you more money. However, banking on appreciation is a dangerous plan even for experienced investors. Look into the four wealth generators of real estate to get a better idea of how to evaluate deals.

You could buy some high quality bonds that yield a lot more than 3.6% (Cap Rate is the NOI/cash needed) and have far less risk than owning a home. If you finance the deal the numbers will change and the return on your money will go up, but then that brings in a new set of factors into the conversation. However, if you have $500k sitting in a checking account earning .5% a year, than this deal is seven times better than that.