What's a good cap rate for an 11 unit apartment in the Midwest?

[David Kuhlke]

Hello BP,

I'm looking at a deal, and I need help determining what qualifies as a "good" cap rate for small apartments in the Midwest.

Here are the details:

11 unit apartment

Asking price: $1.4 million

Monthly rent total: $12,000

Taxes: $2,250 per month (2% of property value annually... I am estimating here on taxes. Using the non-owner occupied SFH rate)

Insurance: $935 per month (estimating $85 per door) 

Property management (10%): $1,200 per month

Vacancy (5%): $600 per month

Repairs (10%): $1,200 per month

Cap Ex (5%): $600 per month 

Annual NOI is $58,260

This leaves me with a cap rate of 4.24% for current asking price (NOI/Price)

Is that good? I have read in an apartment investing book, written in 2005, that a normal cap rate is 8-12 percent but I don't know if the "normal" has changed since 2005 for this kind of investment. I feel like this property is overvalued. If I want a 7% cap, the property should be worth $832,285 (NOI/Cap Rate)

Thoughts?

David