Help Determining Cap Rate

[Dillon Vansickle]

Hi all, 

I'm looking at a deal that's grossing $56,400 a year, with about 39% in expenses(factoring in new taxes). My NOI will be about $34,500/year. This building is in a more rural area, 30 minutes from larger cities. It's a nice/quiet area, so not low income type of rural.

With current numbers it's coming to a 5.7% cap rate(600k asking). I'm having a hard time believing the building is this valuable. It's been very well kept but rents are low and there isn't crazy demand for apartments in the area, all though it's fully leased. I'd have to estimate it's a B-/B area. 

Largest problem is there's very little comp data without going into surrounding cities that are definitely lower income, so that's not the best gauge. How can I determine an appropriate cap rate for this? I'm looking to do a value add, so I can cash out refi in few years. So having a proper cap rate will be important to determining how we can increase value.