Very low cap rate vs high cash-on-cash

[Andy Sirulnik]

Newish investor.  I'm in an area of small New England towns, with a few small city areas steadily attracting young professionals and becoming trendy.  I'm looking at a three-family on a leafy street with with 80% financing, my cash-on-cash return would be 10%-15%.  But the cap rate is only around 2%.  Am I crazy, stupid, some combination thereof, or just missing something?

[Immanuel Sibero]

Cap Rate never includes debt service because debt service is never an expense, nor is it an "operating" expense, but I digress...

Cheers... Immanuel