Getting very discouraged at prices.

[Jennifer Rysdam]

Hey BP. What do you do when every apartment building you look at has such a high price that you couldn't even turn a profit if you tried? I'm trying to purchase in a certain area and everything that comes up seems to have a 5-6 cap rate on it. Some are even top dollar for value-add properties. Why would I pay top dollar for a property, just so I can raised rents and meter utilities in order to break even? After 20% down, my payment is still more than the income on every property that comes up. Do people just put these enormous prices on these buildings just to see if someone will bite? Do you just make an offer at what makes sense, or just pass?
Right now I'm looking at a 23 unit for $1.8 mil. Total cash flow after mortgage payments would be about -$10,000 per year. At a price of $1,371,000 (8% cap rate), I'd net about $21,000 per year on it. How do you guys make it work?